Social Assessment1
E1285, v. 3
Demonstration Project of Alternatives to Chlordane
And Mirexfor Termite Control in China
Social Assessment for the Closure of the Liyang Guanghua Chemical Company, Ltd.
SOCIAL DEVELOPMENT INSTITUTION, HOHAIUNIVERSITY
MAY 2005
This document is a safeguards document prepared for the GEF project China: Demonstration of Alternatives to Chlordane and Mirex in Termite Control. The project is a $28 million demonstration of approaches to implement the Stockholm Convention on persistent organic pollutants (POPs) in termite control. There are three safeguards documents prepared for this project.
1. Pest Management Plan (PMP) prepared for the entire project. The PMP was developed according to the requirements of the World Bank’s Operational Policy OP 4.09 on Pest Management which mandates the use of integrated pest management (IPM). The project itself is essentially a large-scale implementation of IPM in termite control, since it promotes replacement of the current chemical-based termite control methods with environmentally more sustainable IPM-based method. Majority of project funding – more than $20 million – is allocated directly to IPM activities. The PMP and the project document, therefore, are very closely related, and the principal recommendations and consideration of the PMP are an integral part of the project design.
2. Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) specific to the component 4 of the project. The component – with the budget of about $2.64 million – demonstrates a closure of a chlordane and mirex manufacturer – Liyang Guanghua Chemical Company Ltd. – in JiangsuProvince. The EIA and EMP were prepared according to Chinese environmental impact assessment regulations and the World Bank’s Operational Policy OP 4.01 on Environmental Assessment.
3. Social Assessment (SA) which complements the EIA. The SA was prepared to address the social and economic impacts of the closure of the Liyang Guanghua Chemical Company, Ltd. on the plant work force. The SA was prepared as a matter of best practice, and serves as a basis for the worker compensation and retrenchment program which will be implemented under the project.
Table of Contents
1.Introduction
1.1.Background
1.2.Social-economical status of Liyang
1.3.Objectives and contents of the SA
2.Methodology
2.1.Data Collecting
2.2.Filed visit
3.Basic Information of Guanghua factory
3.1.History
3.2.Business situation
3.3.Current employee statues
3.4.Salary Statues
3.5.Productive safeguard
3.6.Development strategies
4.Project social impact analysis
4.1.Product social impact analysis
4.2.Social impact on production line closure
5.Mitigation measures
5.1.Reemployment objects
5.2.Cash compensation
5.3.Re-employment Training
6.Conclusions and Recommendations
Introduction
1.1.Background
Termites are worldwide-affecting pests. It produces a heavy affect on trees, gardens, buildings, dams, bridges, historic architecture, natural sight and environment. There are over 2000 species termites in the whole world and about 482 are found in all but six Northern provinces (Heilongjiang, Jilin, Inner Mongolia, Ningxia, Qinghai, and Xinjiang) in China, which are rich andwith large population. These areas concentrate mostly in southeast which contribute 70% GDP of China. Affecting more than 40% of the total land area in China, termite has caused damages to between 30 and 90% of buildings south of the Yangtze River. It is estimated that the direct economic loss caused by termites in China is about 2 to 2.5 billion RMB Yuan annually. Termites have produced a heavy affect on theeconomic development and living security of people.
Both chlordane and mirex are produced and consumed in China as termiticides and because of heavy affect on human health and environment, they have not been allowed to produce and use in many other countries. There are twelve persistent organic pollutants (POPS) including termiticides chlordane and mirex identified for elimination by Stockholm Convention to accumulate in the food chain, and their ability to travel long distances through the global ecosystems and persist in the environment.
As a country strongly committed to the StockholmConvention, China participated in all preparatory meetings and was one of the original signatories of the Stockholm Convention (signed on May 23, 2001). On August 13, 2004, China ratified the Stockholm Convention and became a Party to the Convention. China has made substantial progress in meeting the Convention requirement that Parties to the Convention submit a National Implementation Plan (NIP) to the Conference of Parties within two years after the Convention enters into force that country. In fact, China started preparing its NIP in mid-2004 and it expected to complete it timely by November 11, 2006.
This project’s demonstration corporation is Liyang Guanghua Chemical CompanyLtd. On one hand, the closure of Chlordane and Mirex Production Facilities will reduce the harm to human health and global environment. On the other hand, the methods and experience can be a demonstration and reference to other projects according to the NIP.
1.2.Social-economical status of Liyang
Liyang, one county level city of Changzhou, is in the south of Jiangsu province plain. It is a land flowing with milk and honey, and is famous for its tea, silk, architecture etc. It is 59.06 km length from north to south while 45.16 km width from east to west. The topography of south, west and north are high while the middle and east are low and flat.
Liyang’s area is 1,535 km2 with 787,000 population (among which 612,600 or 78% agriculturalpopulation) in 2003, and population density was 1293 per km2. It includes 425000 mu surface of rivers and lakes, the average cultivate land per capita is 1.1 mu and forestland is 0.43 mu. TianmuLake scenic spot of Liyang is countrywide famous for vacation and tourism.
Liyang hasa developed economy in JiangsuProvince. In 2003 the average GDP per capita was 15,415 Yuan. The industrial structure proportions of the primary, secondary, and tertiary are11.6%, 55.3% and 33.1%.Financial income per capita of 2003 was 1561 Yuan. The annual salary per capita of urban workerswas 13377 Yuan, netincome per capita of rural was 5126 Yuan and retail sales of social commodities per person were 6286 Yuan[1] .
Guanghua Chemical Company, Ltd. is an experimental enterprise of GEF termite control project.It lies in the provincial economic development zone, which lies in the Northeast Liyang. The planning area of the development zone is 40 sq. km, and the explored areaswere 10 sq. km. Up to now, there are 242enterprises in the development zone and the total investment are 4.6 billion Yuan. Among them there are 180 industrial enterprises and 54 foreign-invested enterprises. The gross income of three industries in this district was 4.888billion Yuan in 2003, industrial sales income 4.24 billion, gross domestic product 1.18 billion and the taxes0.236 billion. The foreign capitals utilized by contracts were 44.21 millionUS dollars; the realutilized foreign capitals 19.18 US million dollars.Exports income was20.13 millionUS dollars. Forty-two enterprises have invested in this district recently. The investment of technology improvement was 8650 million; basic facilities 50 million with new developed area were 3288 mu.
1.3.Objectives and contents of the SA
Termination of the productive operation would have impacts on the employment of the current staff employed in the productive operation. To mitigate this impact and develop necessary measures, a social assessment(SA) is proposed to be conducted.TheSA report has 7 chapters. Chapter 1 and 2 introduce the background and task, references and research approach of SA. Chapter 3introducesthe basic situation of Guanghua Company, which contains eight respectsabout history, ownership, production and management, marketing, workforce, salary system, work security measures and development prospect. Chapter4 describes the contribution of the company to local social economic development, and also point out the harmful effectsto worker health and the community development by chlorine and mirex, on this basisanalyzing the social influence brought by closing the company. In chapter 5 according to the participation and consultation with current employee and company owner , a mitigation measures are put forward on the basis of policies and data as “Liyang State-owned enterprises buy-out service” and “Liyang social security” etc.In chapter 6, the conclusion and suggestion have been proposed according to the demonstration and analysis above.
2.Methodology
2.1.Data Collecting
In order to predict social impact bringswith the closure of company product line, at first the consultant must get detailed materials to analyze the interests loss of all employees. Because this project does not have corresponding policies, the compensation standard draws lessons from relevant projects and policies. At the same time, in order to check the accuracy of the information obtained from the company, the investigation has also consulted local revenuedepartment, enterprise management department and workers’ salary inventories.
SA took following as references: Liyangsocial securitypolicies and regulations, Liyang reemploy and training policy of laid off / unemployed workers, Liyang state-owned enterprise reform and buy-out policy, Liyang minimum living guarantee policies of urban and rural residents, financial dataof Guanghua Chemical Company, Ltd from Liyang taxdepartment, the social security fee payment data from Liyang labordepartment, All the policies documents are mainlygot from Labor Bureau, Social Security Bureau, Civil Administration Bureau, TaxesBureau, Environmental Protection Bureau of Liyang. The basic situation and information of the company is got from both manager and employee workers.
Main reference documents and materials are as follows:
1)Liyang statistical yearbook 2003,
2)File No.49 of 2000 of Liyang municipal government “suggestion on property relations reform of enterprises under municipality
3)File No.58 of 2001 of Liyang municipal government “suggestion on the labor relations reform of enterprises under municipality
4)Liyang no base calculation measures social security repayment;
5)Liyang social security policies of enterprise workers;
6)Balance sheet of 2003, Guanghua Chemical Company Co., Ltd.
7)The profit and its distribution forms of Guanghua Chemical Company Co., Ltd. ,2003
8)Workers’ basic information of Guanghua Chemical Company Co., Ltd.
9)Workers’ payroll of Chemical Industry Co., Ltd.
10)The financial statements of Guanghua Chemical Company Co., Ltd
11)Security policiesforGuanghua Chemical Company workers
12)The 16th order of the State Economic and Trade Commission
13)Chemical law of the People's Republic of China
2.2.Filed visit
In order to get further information and cross-reference and double check the accuracy of the information from different sources, from April 8th to 22nd of 2005, a depth interview investigation of key information provider and agroup discussion were carried out to verify alternately the authenticity of the materials. There were 15people attending thegroup discussion, including 6 women, 4managers and 11line employees.
3.Basic Information of Guanghua factory
3.1.History
Liyang Guanghua Chemical Company Ltd. is a shareholding system enterprise, which was set up by Guan Linsen and Zhang Shunxiang couplein 1988. Originally the company’s predecessor is Liyang Guanghua Chemical Plant, a school-run workshop of LiyangGuanghuaMiddle School. The plant reformed in July2002, renamed as Liyang Guanghua Chemical Company Ltd., it is an enterprise under city of Liyang, the ownership form is private (individual proprietorship), the company juridical person is Guan Huaqing (general manager). The company producing addresslies in the Niucheduo, Liyang economic development zoneof Jiangsu Province, the office address lies in the No. 216Liyang Kunlun South road of JiangsuProvince.[2] The scale was correspondingly small when the company was founded, but now it is expended through the development in recent years. Principal products of business are chlorine, mirex, endosulfan and other chemicalmaterial. The company has 68 employees (appendix 1), including 16 administrative managers, 31 workers in chlorine production line and 21 in endosulfan production line. In October2004, Guanghua Chemical Company Ltd. signed “CPC agreement” with National Environmental Protection Bureau, according to the agreement, in March2005, the company removed the endosulfan production line and compensated 21 production line workers.
3.2.Business situation
The current existing fixed assets of Guannghua Chemical Company Ltd. are 3 million Yuan with good business status; the output value increased year by year from 1999 to 2002, but dropped down in 2003 and 2004. The company had the first production line to produce chlorine and mirex in 1998 and production capacity was 180 tons per year.From1999to 2003 it added another line and the whole production capacity was 360 tons per year. But because of the demonstrationof POPs agreement, it has reduced as one production line from August, 2003; the production capacity is 180 tons per year now. The chlorine stock is 160 tons at present and mirex stock is 2 tons.
In terms of the information of termiteproject brief[3], the general production cost of chlorine is 14,000 to 30,000 Yuan per ton, selling price is 26,000 to 48,000 Yuan per ton. The general production cost of mirex is 50,000 to 72,000 Yuan per ton, selling price is 200,000 to 320,000 Yuan per ton. It is obvious that chlorine and mirex are high profit products. The aftertax price of chlorine of Guanghua Chemical Company Ltd. is 30,769 Yuan per ton and the after tax price of mirexis 170,940 Yuan per ton. Chlorine and mirex productsof Guanghua Chemical Company Ltd. are sold export indirectly and at home mainly.At the normal production level, the annual average net profit is 743,500 Yuanand annual average tax is 1,182,000 Yuan.
Table 3.1 Economy indexes of Liyang Guanghua Chemical Company, Ltd Social
Unit：Ten thousand yuan
Year / 1999 / 2000 / 2001 / 2002 / 2003 / 2004Production value（except tax） / 380 / 476 / 554 / 585 / 516 / 482
Profit / 49.39 / 70.9 / 83.78 / 93.33 / 76.06 / 74.24
Revenue / 87.8 / 114.2 / 131.05 / 139.9 / 120.4 / 114.6
3.3.Current employee statues
Principal products of business are chlorine, mirex, endosulfan and other chemicalmaterial. The company has 68 employees, including 16 administrative managers, 31 workers in chlorine/ mirex production line and 21 in endosulfan production line(appendix 1).
31 workers in chlorine and mirex production line are all agricultural residents with 14 women workers , among them 14 peoplehave been working there more than 10 years, many of the rest have been working there nearly 9 years. Their education degreesare mostly at junior middle schoollevel. All of them are Han nationalities and local residents of Liyang. The companyhas not signed the labor contracts with workers and buy social insurances either. The workers arrangement in chlorine and mirex production line are as follows: 18 online workers, 3 production managers, 4technical workers, 3 maintenance workers and 3 other workers, 31 people altogether. The information of workersis as following:
Employee name / Sex(m=male, f=female) / Education / Nationality / Salary (Nov.2003)[4] / Source(local/non-local) / Buy social security / Sign labor contract / Permanent /temporary(time)
Wang Zhilei / m / primary school / Han / 1460 / local / N / N / 1998
Zhou Anqing / m / middle school / Han / 1500 / local / N / N / 1999
Guan Linkun / m / primary school / Han / 1550 / local / N / N / 1990
Wang Yigang / m / middle school / Han / 1450 / local / N / N / 2003
Tan Bingrong / m / middle school / Han / 1550 / local / N / N / 2001
Guan Xiangfeng / f / middle school / Han / 1460 / local / N / N / 1993
Zhoubin / m / high school / Han / 1460 / local / N / N / 2003
Yang Guorong / m / middle school / Han / 1450 / local / N / N / 2003
Guan Huaping / m / middle school / Han / 1700 / local / N / N / 1990
Tang Shundi / f / middle school / Han / 1600 / local / N / N / 1989
Guan wangqin / f / middle school / Han / 1500 / local / N / N / 1993
Guan Huaxin / m / high school / Han / 1460 / local / N / N / 1997
Guan Weifeng / f / middle school / Han / 1600 / local / N / N / 1996
Wang Jianjun / m / primary school / Han / 1340 / local / N / N / 1995
Teng Xizhen / f / primary school / Han / 1340 / local / N / N / 2001
Wang Zhilei / f / primary school / Han / 1500 / local / N / N / 1998
Zhou Anqing / m / middle school / Han / 1500 / local / N / N / 1995
Guan Linkun / f / middle school / Han / 1400 / local / N / N / 2001
Wang Yigang / f / middle school / Han / 1700 / local / N / N / 1995
Tan Bingrong / f / middle school / Han / 1550 / local / N / N / 1999
Guan Xiangfeng / f / middle school / Han / 1550 / local / N / N / 1993
Zhoubin / m / high school / Han / 1700 / local / N / N / 1993
Yang Guorong / m / middle school / Han / 1200 / local / N / N / 1991
Guan Huaping / m / middle school / Han / 1200 / local / N / N / 1993
Wang Zhilei / m / middle school / Han / 1140 / local / N / N / 1998
Zhou Anqing / m / junior school / Han / 1200 / local / N / N / 1995
Guan Linkun / m / junior school / Han / 1200 / local / N / N / 1993
Wang Yigang / f / middle school / Han / 1200 / local / N / N / 1996
Tan Bingrong / f / middle school / Han / 1200 / local / N / N / 1998
Guan Xiangfeng / f / middle school / Han / 1200 / local / N / N / 1997
Zhoubin / f / middle school / Han / 1200 / local / N / N / 1996
Table 3.2 Employeeinformation of chlordane and mirex production facilities ofLiyangGuanghua Chemical Company, Ltd
3.4.Salary Statues
The detailed data has obtained from the salary sheets of Guanghua Chemical Company Ltd., and has been verified with individual and collectiveinterviews. The salary system of Guanghua Chemical Company Ltd. includes basic wage, subsidy and bonus. Workers are paid per month according the their distributions.
The average salary of all the company workers is 2252 Yuan per month, the basic wage is 1246 Yuan, and average bonus is 645.6 Yuanand subsidy is 372.2Yuan. The average salary of the managers is 3831 Yuan per month, basic wage is 1875 Yuan, bonus is 1275 Yuan, and subsidy is 681.25Yuan. The average salary of workers is 1510 Yuan per month, basic wage is 1000 Yuan, subsidy is 125 Yuan.
Inaddition, the companyonly bought social insurances for10 managers. 31 workers on the chlorine and mirex production line do not have social insurances at all.
3.5.Productive safeguard
Chlorine and mirex are poisonous chemical products, the manufacturing enterprises must provide relevant production security, and workers should also have corresponding protective measures. Accordingrelevant regulations of environmental protectiondepartment, the work security measures that Guanghua Chemical Company Ltd. offers:
Relevant safeguards of chlorine and mirex production are as follows: During its production operation or the agriculture use, gas defense mask, chemical safety protection glasses, corresponding protective clothing, protecting gloves must be worn. Self-support breath instrument must be worn when worker meet emergency. It is forbidden smoking, eating food and drinking water at the working site. After the work, workers must wash clean completely, and preserve the clothes polluted by the poisonous substance alone and reuse after washing. And the workers must take regular physical examinations before obtaining employment and during the employment.
3.6.Development strategies
In order to expand the production scale, strengthen market competitiveness and developwith sustainability, Guanghua Chemical Companyfounded an organic subsidiary factory in Liyang in 1998, and also has been managing a local chemical plant.In 2004, Guanghua Company made an investment in setting up Yancheng Guanghua Chemical Company Co., Ltd. in YanchengCityof JiangsuProvince. In order to avoid profit lostof endosulfan, chlorine and mirex after carrying out CPC agreement, POPs convention, the company is developing new elaboratechemical products.