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Weapons of Mass Destruction (WMD)

China Orders Struggling State Firms to Hire Laid-off Soldiers

by Saibal Dasgupta December 29, 2015

China's central authorities have ordered state owned enterprises to absorb vast numbers of soldiers who are due to be laid off as part of the military reforms announced by President Xi Jinping last September. He promised to reduce the 2.3 million strong military by 300,000.

'Resettling and receiving ex-servicemen is connected to the overall picture of military construction and social harmony and stability,' the official People's Liberation Army Daily, said quoting the government's Assets Supervision and Administration Commission and Civil Affairs Ministry.

This could be a serious blow to China's state-owned enterprises (SOEs), which have already been laying off workers to try to make themselves more competitive at a time of declining business. The country's oil, coal, electricity, steel and cement companies, which are mostly all SOEs, have suffered heavy losses over the past two years at a time when the Chinese economy has been slowing.

'I expect some SOEs would say 'no' or find some way to resist the new order. Many of them are in no position to hire new staff,' said Geoffrey Crothall, communications director of the Hong Kong based China Labor Bulletin.

There are signs the government expects some resistance from the SOEs, and state-backed media report there are already government measures anticipating resistance from the companies.

The PLA Daily said that state-owned companies must not put forward any 'discriminatory documents' targeting ex-servicemen nor limit their numbers.

Executives in SOEs have already been under scrutiny in recent years because of Beijing's ongoing anti-corruption drive, which has led to scrutiny of SOE operations. That means the executives in charge are not likely to directly refuse to add former soldiers to their employment rolls.

But Crothall said there are practical problems in implementing the plan because many SOEs are already not taking any new hires on their employment rolls, instead subcontracting out work that requires new positions. Plus, dozens of SOEs controlled by provincial and municipal governments stopped making profits months or years ago, and have been dependent on cash infusions from local state administrators to stay solvent.

If forced to hire more employees, the companies would likely need even more financial assistance to pay the ex-soldiers. That would mean the government ultimately would still be responsible for paying the former soldiers' wages, even after they shed their uniforms and entered the workforce.

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