Dongguan plans to launch a fund to reimburse unpaid workers left stranded by bankrupt factories in its latest move to avoid social unrest.
The municipal government and local authorities, including the labour bureau and social security bureau, are working out details of the fund including the amount and source of funding, said sources familiar with the plan.
The move comes after the Zhangmutou township administration used taxpayers' money to settle 24 million yuan (HK$27.3 million) in unpaid wages arising from the demise of Hong Kong-owned toymaker Smart Union Group (Holdings).
The fund is expected to be rolled out soon as the global financial crisis threatens the survival of tens of thousands of Hong Kong-owned factories, which employ about 10 million workers in Guangdong.
It marks the latest effort from Dongguan in seeking to shore up its export-driven economy and social stability, after a 1 billion yuan cash incentive rolled out two weeks ago.
'As a short-term measure, [the proposed fund] is important in stabilising workers' confidence and their job security,' said human resources consultant Nelson Siu, president of the Hong Kong Professionals and Executives Association. 'A longer-term plan is needed, but it may end up raising employers' costs.'
