In the past decade, China’s fiscal revenue has bid farewell to double-digit growth, while fiscal expenditure has risen yearly. As a result, the gap between fiscal income and spending has generally been increasing.

In 2020, due to the impact of the Covid pandemic, the fiscal revenue was reduced, and the budget deficit reached a historical peak of 6.27 trillion yuan.

On June 14, there were reports in China’s media that Shanghai and some other provinces had set up salary reduction offices. They plan to adjust salaries in line with local fiscal revenue this time. 

As a result, public security, the most crowded force of civil servants, is expected to be hit hard.

For example, in Shanghai, the annual salary of department-level civil servants has been reduced from 350,000 yuan to 200,000 yuan (1 yuan = 0.15 dollars); the pay at the division level has been reduced from 240,000 yuan to 150,000 yuan.

Zhejiang province also cut the salaries of the civil servants of some government agencies and institutions by about 25%. Hangzhou, its capital and largest city saw a cut of 40%.

A number of the mainland media reported that some civil servants in Jiangsu and Fujian had experienced salary cuts, ranging from 15% to 20%.

Meanwhile, Salaries of civil servants in Zhuhai decreased by 60,000-80,000 yuan, and in Shenzhen by 50,000-100,000 yuan.

Furthermore,  the Chinese Academy of Fiscal Sciences released a fiscal policy report in September 2021. The academy predicts the deficit will reach approximately 10.7 trillion yuan (about 1.6 trillion dollars) in 2025.

Testing workers, one of the most important forces in China’s zero-COVID campaign, were owed wages.

Multiple unverified photos of them ceasing labor have swarmed the internet. They mostly depict closed doors of testing sites in the city with notices that say “On strike; suspending [operations] due to unpaid wages,” or “On strike, service suspended.”

Meanwhile, this video showed Shanghai’s testing workers protesting to demand their rights and salary.

According to a recruiting flier of a district in second-tier city Hangzhou, a COVID-testing sampler was offered 10,000 yuan, over 1,400 dollars, per month for an 8-hour working timeline.

Mr. Li, a journalist familiar with China’s mass COVID-19 testing industry, assumed some local governments are expanding their own PCR testing capacity. This means they might be excluded from state subsidies, hence, the failure to afford workers’ wages.

Speaking with Radio Free Asia, Li also provided another scenario in which the subsidies from the government could be embezzled by local government officials. Li believes there are many cases of this happening.

Chinese hospitals are also in a crisis of salary cuts. 

Citing The National Health Commission’s statistics, Da Ji Yuan reported there are more than 11,800 public hospitals and more than 24,760 private hospitals across the country as of the end of 2021. Among them, more than 2,000 private hospitals have gone bankrupt, with an average loss of around 819,000 dollars, as of July this year.

According to the latest “2021 China Health Statistical Yearbook,” the total debt of government-run hospitals is around 2.61 trillion dollars.

Therefore, many hospital employees said that until now, they have only received wages for January and February. They have not paid wages from March to July.

The Paper, a state-run official media, reported that Liaoning’s Dandong Zhen’an District Hospital also had not paid wages for five consecutive months. 

In response, the local health bureau explained that the outpatient income’s dramatic decline has badly affected the medical staff’s salary. 

 Huang Lin’s pseudonym, a physician at the East China Hospital affiliated to Fudan University in Shanghai, said that the hospital’s operation has been postponed for three years due to the epidemic. 

He added that the hospital is filled with Covid-infected patients, while doctors have to go to the community to conduct nucleic acid testing. The shortage of doctors in hospitals has caused the death of several patients as nurses failed to seek proper medical treatment. 

Not only workers in state units but also workers in the private sector are equally miserable.

According to Chinese financial media Caixin, the cleaning workers also saw their housekeeping payments evaporate.

Shenzhen Qingsongdaojia Technology, which was one of the top three platforms for housekeeping services. After the platform closed in July, it left hundreds of millions of yuan in unpaid bills to consumers. About 5,000 workers were stranded.

The situation has worsened to the point that even court intervention is not helping. Such is the case with the family services platform Guanjiabang. Workers have sought legal assistance from local governments, but nothing was resolved. According to Caixin, even as plaintiffs won their lawsuits, the company lacked the funds to make the court-ordered payments. No money was forced out from its founder either since he had no registered asset.

Like other industries in China, these businesses have suffered since COVID emerged two years ago. But Caixin notes that the platforms have also been knocked down over other reasons, including wrong business strategy and lack of supervision.

Another victim of covid is the Chinese real estate industry which is in the crisis. Chinese football clubs also fell.

Hebei players held up a banner to claim their rights on November 3. The banner read, “Begging China Fortune Land Development to pay the hard-earned money of Chinese players.”

Hebei Football Club, then,  issued a ‘Statement on the Recent Situation of Hebei Football Club on November 5. Accordingly, players continue to suffer from salary arrears as the group’s funds are in great difficulty.

In response, on November 6, Hebei team players issued a statement signed by all players, “Today, all Chinese players of the Hebei team have not received 30% of the unpaid wages owed by the club. And the majority of the players have not been paid a penny of their annual wages in 2022.” 

The ‘Statement’ called on the Hebei Football Club to follow its promises. At the same time, it requested that the Chinese Football Association and relevant departments perform their duties effectively to protect the players’ legitimate claims and rights.

The great days of Chinese football are a thing of the past. The  Association is currently helpless, turning a blind eye to salary debt.

When China’s economy goes down, even big companies find it difficult to survive.

Over the last few days, the topic “Gome stopped paying employees salaries” became the most searched on the popular Chinese social media platform Weibo.

GOME Retail Holdings Ltd. is one of the largest privately owned appliance retailers in mainland China and Hong Kong. It said the company has indeed encountered unprecedented difficulties and severe challenges.  

To maintain normal operation, temporary and emergency adjustments to the salary payments have been made. The total number of employees has decreased by 10,000 people from the end of 2021 to June 2022.

Then, many Gome employees who said on the Maimai platform that their company hasn’t paid salaries for August yet and the company even owes compensation for the staff laid off in July. 

Gome closed 90% of its stores in the third quarter of 2022. It now has less than 500 operating, and its branches have merged from 40 to about 30. 

And its chairman, Huang Xiuhong, said that the company will only provide social security to its employees before the end of December and will no longer pay wages. He also added that in the medium and long term, there would also be uncertainty in the payment of salaries.

Gome has suffered severe losses quickly because of investing heavily in the e-commerce platform “Really Happy” app in the past year. However, the platform has received little response. 

Some Gome employees said, “I heard that the boss is raising money everywhere and wants to sell the building.” 
Employees felt caught in a dilemma. If they leave, they may not receive the salary the company owed them for the past half year. But if they don’t leave, they don’t know if there will be a salary payment.

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