With prices down nearly 60% since 2011, China’s coal industry is facing major dislocations that could lead to significant social unrest, the New York Times reported last week, with the biggest company in the northeastern part of the country, Longmay Group, planning to lay off 100,000 employees.
“China has managed mass layoffs at creaky, state-owned businesses like Longmay before, averting the threat of strikes and unrest by suppressing protests and offering payouts and job training,” the Times notes. “But that was when the economy was booming and could readily absorb displaced workers. The test the government now faces in this depressed coal town and in other hard-hit areas across the country is whether it can head off labour discontent in a slowing economy.”
“They are quite worried about social unrest, so they delay,” said analyst Deng Shun of Shanghai-based ICIS C1 Energy. “These layoffs should have happened two years ago.”
But the uncertainty and, for some, the humiliation of a failing job market is taking its toll. “If any of the leaders would do their job properly, the situation would not be like this,” said one Longmay coal worker. “If they want to sack me, they should just do it. Can it get any worse?”
The growing unrest is a concern for the Chinese government, Perlez and Huang report. “The number of strikes and labour protests nationwide nearly doubled in the first 11 months of this year, to 2,354, compared with 1,207 in the same period last year,” they note.
“The reaction of the demoralized workers is being watched closely because the staying power of the Communist Party has been immutably linked to its ability to deliver continued economic progress. The unwritten social compact here is that the party delivers growth, jobs, and higher living standards, and in exchange, the workers acquiesce to its monopoly on power, surrendering the right to organize unions or protest.”
