I don’t know anything more about the case of Chip Starnes than the what this article and many like it are telling me. But basically it looks like a misunderstanding between the management and workers at small factory in Beijing has made it to CNN.
If Starnes is to be believed, (and the facts don’t seem to be much in dispute) one division of his China operations was to be closed down and moved to India, and Starnes complied with the law in offering severance packages to those employees affected. No complaints there, but then other employees believed, wrongly, that the entire plant was closing, and that they, too, were going to be laid off but without those satisfactory severance packages. (One worker, in addition, claims that the company owed her 2 months wages, but so far that’s an isolated claim.)
So, we have a small factory owner shutting down one part of his factory and offering satisfactory compensation to the workers who are affected, and somehow this morphed into headline news.
Question: WHY did the workers think they were getting screwed?
-The workers saw some machinery packed up and readied for shipment out of the factory to India.
-These same workers found out that a subset of the labor force were getting terminated with severance pay.
-The workers, who have by now heard stories of runaway bosses leaving unpaid wages, wanted to ensure they didn’t get screwed out of their salary and severance pay, so they exerted the only pressure they could– blocking the exits and holding the company owner accountable (and hostage) until they got acceptable assurances that they’d get paid.
Better Question: Why WOULDN’T they think they were getting screwed?
It looks like the company let the workers speculate about the future, rather than telling them simply and clearly what was going to happen and how it would or wouldn’t affect them. In the absence of credible information to the contrary, why wouldn’t the workers think their jobs were also on the chopping block, and that their compensation might not be forthcoming?
This quote from a USA Today article states explains it well:
Chinese workers, who are well aware of their legal rights to compensation, as well as often higher “market rate” for compensation, share “a well-founded suspicion of the boss’ intentions,” said Geoffrey Crothall, communications director for China Labour Bulletin, a Hong Kong-based labor rights group. During the 2008 financial crisis, there were hundreds of cases of fleeing bosses, he said. “The situation is not so bad now but workers are still suspicious whenever there are signs that the factory is closing down or moving away.”
The moral of the story:
It’s a cautionary tale for manufacturing leaders in China. Communicate early and often to pre-empt “bad news” rumors that could get out of control. And this was a factory of under 200 workers, so reaching out to them should have been relatively simple. Why it wasn’t doen, or not done effectively, is a mystery to me.
UPDATE: Unknown is whether Starnes was in full compliance with the current labor contract law in China. This law states that layoffs of over 20% of a company’s labor force (as was the case here) require prior approval from the Labor Bureau. Did he get this approval? If not, I wonder if having done so would influence how the authorities reacted to the dispute.
One nice thing… while we have heard Starnes complain, and reasonably so, about both his treatment and about being bullied into an unfair settlement, I don’t think we’ve heard any China-bashing from him. In fact, he says he plans to buy out all the workers contracts and re-employ those that want to stay, even those that held him captive.
A link to the Fox News story here: