Nationalization is not a short cut to coal mine safety

In this e-bulletin, CLB director Han Dongfang argues that moves by the authorities in Shanxi, the province at the heart of China's coal country, to close and merge small privately-run mines with larger state-run mines will only improve coal mine safety if, in addition, the miners themselves are allowed and encouraged to play a key role in safety management and engage in collective bargaining with their bosses over pay and work conditions.

Han points out that managers at state-owned mines are just as fixated with profits as their counterparts in the private sector and that, in most state-owned mines, production is in any case contracted out to private operators. Moreover, managers in state-owned mines are just as ruthless as the owners of small private mines in imposing inequitable compensation agreements on coal mine accident victims and their families.

Han suggests that while the closure, merger and nationalization of small private mines may make coal mine safety management more efficient, it can only be the start of the process.

A translation of Han Dongfang's commentary, which was first posted on CLB's Chinese language website on 30 October 2009, follows below.


In September last year, the Shanxi provincial government issued its Opinions on the Implementation of the Accelerated Merger and Restructuring of Coal Mining Enterprises, which proposed that small and medium-size coal mines be absorbed into large state-owned coal mines. The stated goal was to, by the end of 2010, eliminate those private coal mining enterprises with an annual output of less than three million tones, and limit the total number of mine shafts to under 1,500. The owners of those small-scale mines targeted for takeover and restructuring had little option but to comply. They could either sell their entire holding or become a minority shareholder in the enterprise. According to recent media reports, by 26 October 2009, 90 percent of small mine owners had already signed official merger agreements, with state-owned enterprises taking over 80 percent of the equity and up to 68 percent of the management rights. The merger process is scheduled to be completed by the end of November.

According to provincial officials, the Shanxi government has not hesitated to use administrative force to implement the merger and restructuring of coal mining enterprises; firstly as means to improve coal mine safety, and secondly, to reduce the wastage of resources during coal extraction. Another objective is to eliminate any opportunity for corrupt local officials to grab ill-gotten gains from privately-operated mines, and thereby rebuild what little is left of government credibility and legitimacy.

I do not doubt the sincerity and determination of the Shanxi provincial government to improve coal mine safety, but to pin all one's hopes simply on the nationalization of coal mines is untenable.

As early as 2006, China Labour Bulletin published a research report highlighting the collusion between government and business as one of the fundamental reasons for the sharp spike in coal mine accidents in the early 2000s. And while it is true that this current action to forcibly close and merge small mines could curb corruption among Shanxi officials, it will not address the other more important reason for coal mine accidents, namely that, in both state-owned and privately-owned coal mines, mine workers have no right or opportunity to stand up for or defend their personal interests with regard to work safety, wages and benefits, working hours etc. Indeed, employers in both state-owned and privately-operated coal mines tend to view mine workers as little more than "mining tools that breathe." Up until now, the Shanxi provincial government has not even raised this problem, and as a result I doubt the extent to which this much-publicized restructuring measure will bring about any real improvements in safety.

My first question is, would the nationalization of coal mines guarantee the safety of miners? As an enterprise responsible for profits and losses, state-owned coal mines are just as concerned with profit maximization as privately-owned coal mines. And their managers' disregard for miners' lives in the push for profit or the drive to exceed production quotas is just as appalling as in privately-owned mines. According to official figures, thousands of miners have died in major accidents at state-owned mines over the last decade. To cite just a few examples, on 20 October 2004, 148 miners died in a gas explosion at the Daping mine operated by the Coal Industry Group of Zhengzhou, Henan; on 28 November, 166 died in a gas explosion at the Chenjiashan coal mine, owned by the Tongchuan Mining Bureau of Shanxi; on 14 February, 2005, 214 died in a gas explosion at the Sunjiawan mine operated by the Mining Industry Corporation of Liaoning; on 27 November 2005, 171 died in a coal-dust explosion at the Dongfeng mine shaft operated by the Qitaihe subsidiary of Heilongjiang Coal Industry Group. All these coal mines had sophisticated and comprehensive coal extraction systems, advanced alarm systems for detecting gas leaks, as well as excellent safety rules and regulations on paper. However, this was clearly not enough to prevent such appalling tragedies. One after the other, these accidents in state-owned mines have discredited local government officials. On 20 February 2009, Shanxi governor, Wang Jun, told a provincial meeting on mine safety that he would "rather be berated than witness mourning." Just two days later, on 22 February, there was a gas explosion at the Dunlan coal mine run by the state-owned Shanxi Coking Coal Group that killed 78 people, and wounded 114 others, five seriously. Faced with such an atrocious safety record at large-scale state-owned coal mines, how could anyone possibly be convinced by the argument that merging and restructuring coal resources can, in and of itself, protect the lives of workers?

Secondly, would miners' wages and benefits be protected if mines were nationalized? In the late 1990s, in order to improve profitability, most state-owned coal mines introduced a system in which mine shafts were contracted out to private operators. In other words, our state-owned coal mines have been "state-owned but privately managed." As such, many state-owned coal mines have no direct relationship with the miners working in the mine shaft; the mine managers only sign contracts with the contractors operating the mine shaft, not the workers. It is these private contractors who control miners' jobs, wage levels and even their lives. Managers of state-owned coal mines do not care, or even ask about the wages given to miners by the contractors, their working hours, rest time, work conditions or social security benefits etc. This being the case, how could the restructuring and nationalization of coal mines bring about an improvement of miners' wages and benefits?

Thirdly, would nationalizing the coal mines mean that injured miners and victims' families obtain reasonable compensation in the wake of an accident? For many years now in the private sector, it has been almost impossible for injured miners and victims' families to obtain satisfactory compensation because mine owners often hired thugs to threaten and force them to accept derisory monetary settlements. When an accident occurs in a state-owned mine, however, there is no need to hire criminals, the government steps forward and dispatches the police in the name of "upholding stability." They monitor and corral injured miners and victims' families, and use similarly coercive means to force them to accept the terms and conditions of compensation agreements unilaterally imposed by the coal mine. The "official" means used in state-owned mines are no less coercive than those used by private mine operators and their hired thugs. For injured miners and the victims' families, the result is the same – arbitrarily imposed and unsatisfactory compensation. Faced with the litany of misdeeds committed by state-owned mines in the wake of coal mine accidents, if there is anyone who still believes that working for state-owned mines guarantees their safety and livelihood then that person is either naive or foolish.

Naturally, I hope that the measures introduced by the Shanxi government can create the conditions for an improvement in work safety. They should at least make coal mine safety management more efficient. However, a further step needs to be taken to establish mechanisms that can enhance the gains made by nationalization. Towards this end, I have two suggestions:

First, in both state-owned and privately-operated mines, the government should use administrative means, such as enacting new legislation or modifying the existing Trade Union Law, to establish coal mine safety supervision committees, comprised of directly elected miners' representatives. The committee's work should be led by the mine's trade union, and protected by the Trade Union Law. The committee and mine management should jointly draw up a set of safety regulations, decide on the purchase and installation of safety equipment, and regularly inspect such equipment both above and below ground. The committee should hold regular meetings to assess the mine's overall safety environment, identify hidden dangers, and request improvements in mine management. The committee should meet regularly with management to discuss routine safety issues, and hold emergency meetings when urgent issues arise. A plan of action should be discussed and formulated, and its implementation supervised by the committee.

Second, the government should legislate for the establishment of a collective bargaining system. Under this system, the mine's trade union should lead democratically elected workers' representatives in collective bargaining with management. Representatives should come from all work areas, both above and below ground, and discuss such issues as wages and overtime remuneration, social security benefits, working hours and conditions, with the aim of concluding a comprehensive collective agreement. Collective bargaining could be held once a year or at least once every three years. If conditions change in the period between bargaining sessions, resulting in necessary amendments to the contents of the original collective agreement, then either the employer or the trade union could request to hold provisional collective bargaining, so as to amend the clauses of the collective agreement. This would help establish a more stable workforce that is more aware of its rights, including the right to a safe and healthy work environment, and is more willing to stand up for those rights.

I wish to reiterate that merely having the conditions for resolving a problem does not mean that the problem has been resolved. Merging, restructuring and nationalizing small-scale coal mines should only be the start of the process. Only when an effective system for resolving the safety problems inherent in China's public and private coal mines has been established, will safety standards actually start to improve.

Establishing miners' production safety committees and an industry-wide collective bargaining system is not only the best (perhaps the only) way to resolve mine safety issues in the short-term, it will in the long-term also help to protect workers' rights, and enable the country to achieve sustained economic and social development.
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