More than 24 million yuan ($3.5 million) of public funds has been used to compensate 7,000 former employees of collapsed toy maker Smart Union Group, a senior local official said yesterday.

In an interview with the Xinhua News Agency, Xu Hongfei, deputy head of Zhangmutou in Guangdong province, where the Hong Kong listed firm operated two factories, said the town government had agreed to reimburse all those who lost their jobs on Oct 15.

"The boss is nowhere to be found, so the government is paying the wages owed to the workers," he said.

Former employee He Ming said yesterday he had been given 1,800 yuan for the 13 days he had worked this month.

"My monthly pay was about 3,000 yuan, so the money I got from the government was about right. I'm satisfied," he said.

While the government has agreed to cover back pay, it will not, however, finance any redundancy payments owed by the firm, Xu said.

About 1,000 former employees have hired lawyers to help them seek compensation from Smart Union, Xinhua said.

The Zhangmutou government will do all it can to help find new jobs for those who were made redundant, Xu said.

Meanwhile, in neighboring Shenzhen on Tuesday, the city government used 3.7 million yuan of public funds to cover back pay owed to some 800 workers left jobless with the demise of Chuangyi Toys Co Ltd, the boss of which has been missing since Oct 14.

A source with the Pingshan community office, where the Hong Kong funded firm was based, told Xinhua that local labor authorities had secured the company's assets and will auction them off at a later date.

In another development, the government of the Longguan district of Shenzhen is currently deciding what action to take following the closure on Monday of the Hong Kong funded Gangsheng Electronic (Shenzhen) Co Ltd.

"A working group comprising representatives of the police, courts, and the labor and social security bureau, has been set up to investigate the case," Peng Gang, an official with the district publicity department, told China Daily yesterday.

Also, on Tuesday, the Shenzhen labor and social security bureau publicized the names of 30 companies that owe in excess of 12 million yuan in back pay to their workers, and demanded their executives report to local labor authorities within 30 days.

Yang Baohua, deputy director of the Shenzhen labor bureau said that since June, the city government has paid out more than 10 million yuan to cover wages owed to laid off workers.

(China Daily, Xinhua News Agency October 23, 2008)