Many large state-owned enterprises (SOEs) have chosen to grant paid leave to employees instead of laying them off after suspending operations because of the global financial crisis.
The Shanghai-based Oriental Morning Post reported last week that 22,000 workers of China International Marine Containers Co (CIMC) have gone on leave because the company's core business, dry van manufacturing, has come to a standstill for two months.
The CIMC issued a statement to the Shenzhen Stock Exchange yesterday, saying: "The whole dry van manufacturing industry in China has almost stopped production ..." The world's largest shipping container maker, however, did not clarify whether 22,000, or 38 percent, of its employees had actually gone on paid leave.
Dry van business accounted for 51 percent of the Shenzhen-based firm's revenue and 22 percent of its net profit last year.
The firm usually allows some workers to take leave during the "slow season" between the fourth quarter of a year and the first quarter of the next, the statement said.
But this year the "slow season" came earlier after China's exports fell because of the global financial crisis, causing a drop in the trade volume of containers, the statement said.
The central government has asked large SOEs, especially those in labor-intensive industries to avoid mass layoffs.
SOEs in finance, oil, power, and telecommunications sectors in provinces such as Hubei, Shandong and Shanghai have been urged to cut staff salaries instead of laying them off.
Some large SOEs have already announced that they would not cut jobs. "We have more than 20,000 employees but we won't layoff even one of them," Chen Xingui, president of Panzhihua Iron and Steel (Group) Corp told the Securities Daily last week.
"SOEs should shoulder more social responsibilities during the global financial crisis. The problem can be solved only through development not by cutting jobs," he said.
Another major steel maker Wuhan Iron and Steel (Group) Corp (WISC) announced last month that it had no plans to cut jobs. "We have no plans either to cut jobs or salaries," Li Jianjun, deputy director of WISC's human resources department was quoted by People's Daily website as having said.
"But since some of our departments may not be able to meet their business goals this year they won't benefit from the performance-oriented bonus system," he said.
"Promises of large SOEs can help boost the confidence of other firms and stabilize the market,"Liu Junsheng, of the labor-wage institute of the Ministry of Human Resources and Social Security, said on Sunday.