| How do you interpret China’s New Labour Law? | |
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| Jan 11, 2008 01:30 |   |
 | China’s New Labour Law is said to be effective on January 1 in 2008. Before it is adopted, this newly made law has aroused many people’s attention, especially those employers. It is reported that Wal-mart, Huawei and some other companies have started to reduce their staff on large scale and the New Labour Law was the ‘culprit’ since it has included some preferential rules to those employees but not good for those employers. If I remembered correctly, Huawei spent about one billion yuan to encourage its staff quit. It seems that those employers are afraid of this new law. Why? I don’t understand it. Today, I read another interesting article. It says that the implementation of China’s New Labour Law will add fuel to global inflation. The author argues that Chinese massive labour force who has low wages has contributed much to curb global inflation for much of this decade. However, they will start to benefit from the new Labour Law this year. Consumers everywhere are afraid that it might raise higher prices increase. Why? The new labour law makes it harder to fire workers or casual labour. It is estimated that workers’ salaries are sure to increase 10 to 15 percent this year even without legal changes. How do you comment China’s New Labour Law? Will it worsen global inflation? Notice: To get detailed information about China’s New Labour Law, please access: http://www.chinalabor.cc/ |
| Jan 13, 2008 03:27 | #1 |
| I have two responses... the direct one first. Employers are always afraid of things that might reduce their profits, although the more enlightened ones know if they invest in a happy and looked after workforce they will actually improve efficiency. My bet is that Huawei was wanting to reduce staff numbers anyway and this is a way of claiming it wasn't their fault. I don't know the company but I would guess they inherited a high staff load when they took over the business from the government. Global inflation comes from several things, one of which is China's fast growth rate. One of the issues is that China is actually has a shortage of skilled workers in some areas - and your comment that wages are forecast to rise by 10 to 15% supports this - and that in turn is why the government knows it needs to cool the economy a little. So if some workers are released (I mean sacked) they will hopefully get jobs elsewhere. Also if labour becomes more expensive, employers will increase capital investment instead...and actually increase efficiency. |
| Jan 13, 2008 03:55 | #2 |
| No, as I research I have more comments and questions! I strongly recommend looking at http://www.chinalawblog.com/ chinas_new_labor_law_its_a_hug.html Based on this legal opinion, and provided the governemnt is serious and the courts are allowed to apply the law, this is fantastic news for China's exploited workers. I know quite a few whose employers have been blatantly flouting the 1995 law. Why will this law be any better...who will enforce it? Most workers are too frightened to do so themselves. |
| Jan 13, 2008 05:07 | #3 |
| Article 14 gives rights to employees who have worked for an organisation for ten years or have had two previous fixed term contracts. They are entitled to open ended contracts and retrenchment/severance benefits. There are other resatrictions too (article 41 for example) Therefore some employers may have sacked staff before the new law came into effect to avoid this regulation |
| Jan 13, 2008 05:24 | #4 |
| Ok, now to my question. I was looking at the 1995 law just a few days ago for the reason you see below and it seems that the new law has removed the details of maximum hours wokrd, overtime and pay for working on holidays but now says see the state regulations. I wonder if they have been changed - they were very worker oriented but seemingly not enforced.. I have a Net friend who quit a job a as translator because she was required to work 6.5 days a week and to 7:30 pm. She took a job that promised 6 days a week and no late hours. She is now forced to work from 8 am to 9pm and on some occasions to 11pm. For the last 3 weekends she has been forced to work in the factory making shoes. She says she will receive no extra pay for all this extra work. Like most workers she is frightened to do anything about it because she will lose her job and she cannot afford to. What can she do? The new law, Article 32 says workers have the right to report such misconduct, and another says that compensation is payable, and the mangement will be fined (though not very much). What is the appropriate course of action? Does the law apply to foreign workers too? I cannot see any reason why not unless it is specifically legislated elsewhere that the Labour is not applicable to foreigners. There are one or two interesting Articles in there!!! |
| Jan 16, 2008 20:30 | #5 |
| Quote: Article 14 gives rights to employees who have worked for an organisation for ten years or have had two previous fixed term contracts. They are entitled to open ended contracts and retrenchment/severance benefits. There are other resatrictions too (article 41 for example) Therefore some employers may have sacked staff before the new law came into effect to avoid this regulation. Agree! That is the reason why those employers sack their staff. Huawei spent 1 billion yuan to encourage their staff resign just out of this reason. Paul, those worker-oriented articles are hard to implement. Take overtime working for example. In the south of China, working overtime is very usual and the workers don't get extra payment. According to the law, the workers are sure to get extra payment for working overtime. Annual vacation holiday with pay is another example to illustrate this. The state regulations say that workers have the right to enjoy their annual vacation holiday with pay. But actually they daren't enjoy their rights. Why? They are afraid of being sacked. They know the labour law but daren't sue their employers and it is the reason why your net friend don't use the law to protect her interests. Quote: Does the law apply to foreign workers too? Paul, not all foreign workers are protected by the law. The law only applies to those who have established labour relations with their companies. On the other hand, those foreign workers should finish all procedures required by the law. Otherwise, the law can not protect him or her. |
| Jan 26, 2008 18:04 | #6 |
| Sorry I am slow to read your reply Jimmy. Unfortunately I fully agree with your answer about China's labour laws. I believe the central government is serious about them but it should implement a method of policing and enforcing each new law. I'm not quite sure what you mean in your reply on foreign workers but I think you are saying that tgose covered by collective bargaining are covered, but those under individual contracts are not. My own small employer is wondering if they renew my contract for a second year whjether I become a permanent employee at the end, subject to visas etc. Of course they will find out officially, I am just asking around to get some initial views...so thanks Jimmy. |
| Jan 26, 2008 19:55 | #7 |
| Quote: I believe the central government is serious about them but it should implement a method of policing and enforcing each new law. I agree with What Apault says. The Chinese government is used to do such things. Often many good policies (or seeming good) are made, but it is hard to implement. Why? because the cost of commiting a crime is low. And the supervision system is not effective. Taking the labor law for example, even if the employer doesn't obey the law, the employee has to cost a lot to win his legal rights. |
| Jan 26, 2008 20:48 | #8 |
| i know, particularly in big cities of china, enterprises are much more profit-oriented (cruel)than anywhere else in terms of lean mgt-cost cutting. |
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