In a Chinese Factory, the Violence Is Rumor but the Layoffs Are Real

STATE workers frustrated by the threat of joblessness burned down a workshop at the beleaguered Tianjin Watch Factory. A female employee jumped off the roof of a building, and the factory manager was murdered. Finally, Chinese troops arrived to take over the factory and quell the unrest among its 5,000 workers.

All these so-called events never happened, although the loss-ridden firm is undergoing a major streamlining of its work force, according to factory workers and the state-run press.

But the persistent and widespread rumors, which recently alarmed the eastern port city of Tianjin and neighboring Beijing, signal how jittery Chinese state factory workers are over the threat of unemployment.

An estimated 20 million to 30 million workers in China's state-run firms are redundant and face possible unemployment as the country moves to scrap its 40-year-old guaranteed job system.

A government plan to "smash the three irons" of fixed jobs, wages, and positions for China's 140 million workers is part of a drive by Chinese leader Deng Xiaoping to streamline the stagnant, state-run sector.

The plan faces major obstacles, however. China still lacks an active labor market, and existing unemployment insurance funds amount to less than 20 percent of that required for 1992 alone, Chinese economists estimate.

Meanwhile, pressure on the government to create new jobs is high, as another 36 million Chinese city dwellers will begin looking for work between 1991 and 1995.

The biggest problem lies in the dependent mentality of the gigantic Chinese work force, which has been nurtured for decades on socialist policies that made firing virtually impossible.

At the financially strapped Tianjin Watch Factory, which this February sent about 60 percent of its workers home on an extended leave, employees say the streamlining policies are creating a "crisis."

Xu Guoliang and his wife, both factory workers, together are paid about $58 a month, or 25 percent less than before the factory instituted the austerity measures. An estimated 300 workers at the factory are expected to lose their jobs once the reorganization is complete, employees say.

"We won't starve, but we can't eat well," says another worker, who recently learned that he is likely to be jobless after 16 years at the factory.

"If I go to a restaurant, it will eat up half my wage," says the worker, who incurred a 40 percent salary cut. "We can't save any money now."

All women workers at the factory, like Mrs. Xu, have been forced to retire once they reach 47 years old, three years before the normal retirement age.

Workers denied the rumors of suicide and armed intervention. But some said a few employees protested before the Tianjin Communist Party headquarters in April, when formal layoff decisions began. Factory officials declined to be interviewed.

City officials instructed the factory to keep workers on the premises, employees say.

In a drastic measure to keep wages up, the factory has distributed the overstocked watches to workers, who can try to peddle them at a Tianjin free market created for ailing state firms to unload their goods.

Yet the factory's workers, who will be given six months of unemployment aid after they are dismissed, fear they are too specialized to find jobs in sales or other services.

"We are paying the price for the past," Mr. Xu says. "But we must pay the price if we want a better result."