Strike at IBM Subsidiary in China over Severance Package Dispute Enters Second Week

The strike by workers at an IBM (News - Alert) subsidiary in China has entered its second week over a compensation dispute.

It is taking place in Shenzhen, located in Guangdong Province, and involves IBM Systems Technology Company (ISTC) – and relates to a severance package at the server production plant.

According to late news reports, some 20 workers were fired for “disobeying company orders, absence without leave and gathering together during work times,” according to local news reports. Other news reports said some of the striking workers either quit their jobs or returned to work. Still other workers remain on strike, and news accounts said some 100 workers were protesting and are temporarily staying in tents, according to the Shanghai Daily. Altogether, the dispute involves more than 1,000 workers.

According to a Shenzhen television news report, the workers were told they could either leave their jobs before Wednesday and would be given compensation and extra cash, or, if they stayed, they would become employees at Lenovo (News - Alert) – and not get the extra cash. The news report claimed such practices violate China’s employment laws, and the employees want more cash under a formula which considers how long they have worked and their current average monthly salaries. Workers are also concerned about the long hours they work and workplace conditions. The workers claim they often work between 8 am and 11 pm for 15 straight days, according to a report from ZDNet.

Earlier this year, Lenovo announced it was to acquire IBM's X86 server business for $2.3 billion. Lenovo said IBM needs to handle the dispute because the acquisition is not yet final, Reuters (News - Alert) reported.

"Lenovo and IBM are two independent companies. Any integration between Lenovo and IBM's x86 server department will not be conducted until the deal is closed," a Lenovo online statement said. "To ensure a smooth transition, Lenovo is committed to provide opportunity for all employees from IBM's x86 server department who transfer to Lenovo, without any reduction of their wages and benefits.”

In total, more than 7,500 employees now working for IBM worldwide will begin working for Lenovo once the deal is made final.

The strike in China is seen as being the result of there being fewer workers in the tech sector in China, and more workers have organized to respond to management, Reuters said. It means more risks for multinationals, Reuters said, including those in the tech sector.

“Chinese workers, after being exploited for so long, are now more and more aware of their rights and united,” Duan Yi, a labor lawyer, told Reuters. “They have more of an idea of collective action.”

The China Labor Bulletin said there were 1,171 strikes and protests in China between June 2011 and December 2013.