Yue Yuen counts the cost of strikes

China
Published:  30 April, 2014

Chinese shoe manufacturer Yue Yuen Industrial (Holdings), a supplier for Nike and Adidas, said the recent labour dispute that stopped some of its production this month will cost it nearly $60 million initially and the bill could increase.

The footwear maker said direct losses from a strike at a plant in southern China cost it an estimated $27 million, while increased benefits to workers will cost it $31 million in 2014 alone.

Workers walked off the job at the company's Gaobu factory in Dongguan, Guangdong province, early this month in a dispute over what they alleged were insufficient social-insurance and housing payments.

More than 80% of the employees at the Gaobu factory have returned to work, Yue Yuen said. The factory employs about 45,000 workers and its production volume accounts for about 10% of Yue Yuen's total, the shoemaker said.

The company has agreed to provide workers at the factory with an adjustment to employee benefits, including an additional monthly living allowance of RMB230 ($37).

Yue Yuen also said it will make back payments for contributions owed to the employee-benefit program but that the amount can't be quantified now. It said it will make a further announcement "in due course."

Yue Yuen, which had promised to make all social-insurance back payments, starting May 1, had previously reported a profit of $434.8 million for 2013, down 7.1% from the previous 12 months.

The average monthly wage at Yue Yuen is about RMB3,000 ($479) but payments to social insurance were based on income of about RMB1,810 ($289) for most employees, workers have said. In China, both employees and employers are required to pay into their workers' social-insurance accounts.

Source: Wall Street Journal