Some 200 bus drivers in Guangzhou, Guangdong Province argue with a representative of the firm over their labor contracts and compensation standard on January 16, 2013. Photo: CFP

China's State-owned enterprises (SOEs) have been famous for providing an "iron rice bowl" of a permanent job and plenty of benefits to their employees. But what happens when that rice bowl is snatched away?

During the last 30 years, as China switched to a mixed economy from a purely State-run model, millions of low-or-middle ranking SOE employees in industries such as banking, petroleum or tobacco have lost their jobs in a series of economic reforms. Some found jobs elsewhere, but others were forced into long-term unemployment or a perilous retirement. Many feel cheated of what they believed was a permanent position. 

Some have turned to the country's petition system for answers. But while a fraction of petitioners achieve results, the prospects for these laid-off workers seem bleak.

"We have been petitioning for 10 years and no one solved our problem. Many of us have no jobs and suffer serious diseases, but cannot afford to treat them," said Liu Xiaohua, a former employee who was let go from a tobacco company in Wuhan, Hubei Province in 2005.

More than 20 petitioners who formerly held jobs in the tobacco industry from all over the country including Liu arrived in Beijing and came to the China Tobacco Corporation's headquarters to protest on April 1, while many other petitioners who planned to come were stopped by local officials.

Liu said staff in the corporation even beat them to stop their petitioning. This is not the first time for them to petition in Beijing, and they have no plans to stop, she said.

The China Tobacco Corporation could not be reached for comment as of press time.

Most of the petitioners want their former employers to pay for their social insurance as they have not been covered after the termination of their labor contracts, or if they are younger, want their jobs back, said Liu.

China's social welfare system is strongly tied to employers rather than independent institutions, with many SOEs paying out significant pensions or medical costs for workers or retired workers. Those let go in the 1990s or early 2000s, though, have often missed out on these benefits, coerced into taking one-time deals that ended their legal rights.

But labor experts say there is little legal ground for their requests, and that they are among those unfortunates ground up by the wheels of history. 

Malpractices

State-owned companies were supported mainly through government subsidies, but when the country's economy took a downturn in the late 1990s, the government was no longer willing to take the burden of redundant staff, and the idea of downsizing staff emerged to improve efficiency, according to Tian Yun, a scholar with the China Macro Economics Institute.

But malpractices also emerged as some companies were too eager to downsize and many forced employees to accept compensation in return for breaking their contracts, said petitioners, noting that the companies promised that if business picked up, they would be offered priority for new positions. The longer one had been working in the company, the more compensation one could get, according to the rules.

"Our company told us that it was nearly broke and if we don't accept the compensation and leave, we will get nothing in the end," Chen Shi (pseudonym), who left the tobacco company he worked in 2000 in Heilongjiang Province, told the Global Times.

Chen lost his hearing due to an occupational injury in the company. He was paid 40,000 yuan ($6,431) in compensation and chose to end his labor contract with the company as he thought he had no choice.

Liu, who received a one-time compensation of 112,000 yuan, said that many of those protesting were forced out of their companies in the same way as Chen. They accuse their employers of being "liars."

"Look at the companies now. They are not broke. Their business is booming and my former colleagues who did not leave now earn an annual salary of 150,000 yuan. It never fulfills its promise on letting us back," Liu said.

Although the Chinese public has turned against smoking in recent years, and new anti-smoking measures have been introduced in many areas, the tobacco industry shows no sign of weakening.

The industry paid taxes worth 816 billion yuan in 2013, an increase of nearly 14 percent from 2012.

Both Liu and Chen noted that new recruits were brought to the company right after they left, which made them even angrier.

Wang He, who used to work in an oil field in Liaoning Province and later found a job in a private company after her State-owned employer downsized her, told the Global Times that companies "cut" the employees who did not have proficient skills, tying to "get rid of burdens."

Fruitless appeals

Although the petitioners received initial compensation, they have lived hard lives as many of them were not young, and did not have specialized life skills.

Chen made a living as a vendor, struggling to hide from urban management officers every day and some of his previous colleagues died from serious diseases for which they could not afford treatment.

 "They should not dump us into society and abandon us when they have been profiting," said Liu.

Former employees of State-owned banks launched several protests in Beijing in November 2013, asking authorities to help with their problems.

"At points in the reform period, State-owned companies were in a very tough situation and many were facing bankruptcy. But for some monopolistic industries such as oil or tobacco, the government allocated funds to support them through the difficult time," Tian said.

Shi Yun, a professor from East China Normal University, told the Global Times that the petitioners' accusation that their employers couldn't downsize them because the firms weren't really in financial trouble is on shaky ground legally.

"If the companies go through the official procedures of reducing staff, they must prove that the company is in a financially difficult status, but their employers did not go through such procedures and the law did not cover the specific situation of terminating a labor contract with a one-time package," Shi said.

However, policies were issued in 1999 stating that companies should not adopt this one-time compensation method and abandon former workers.

"It's not only the problem of State-owned companies, it's about the whole social insurance system as our country still puts far from enough funding into this," Tian added.