International Law

China Unemployment Benefits

By Stan

Not only does this article discuss important issues relating to our current economic woes, but I find this interesting as it highlights some of the defects in the current social safety net over here:

Hong Kong-owned Chong Yik Toy Company, has shut down its factory in Shenzhen, in Guangdong province, the South China Morning Post reported, citing local officials who had paid the workers from emergency funds.

‘The workers got payments ranging from a few hundred yuan to nearly 8,000,’ Qiu Weiquan, a district labour official, told the Post, adding the local government had paid a total of 3.4 million yuan in compensation.

The part there that gets me interested relates to back wages being paid out of emergency funds by the local government. It’s pretty common, unfortunately, for a lot of enterprises to get pushed against the wall financially, become insolvent, and then not be able to pay prior debts to workers. Those workers, who are suddenly out on the street, then get really pissed off, and sometimes things can get ugly.

This is another reason why unemployment insurance is a good thing. Not only does it provide a financial bridge between jobs, but as contributions are paid on a regular basis and overseen by a government, it takes the financial health of the employer out of the equation.

Note: I understand that in the article I excerpted above, the situation there concerned back pay, which is a slightly different issue than unemployment benefits. However, when the system is not always equipped to ensure that employers pay workers for monies owed, I think unemployment benefits are even more useful as a stabilizing tool.

Full post as published by China Hearsay on October 23, 2008 (boomark / email).