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New labor law burden on clothing industry?
28
Jan '08
China has implemented a new labor contract law on January 1, according to which employees cannot work more than forty hours per week and if they do, the employer has to pay. This led to the increase in production cost. As a result garment manufacturers raised the prices of final products.

The New labor contract law, further, requires the employers to shoulder higher social insurance and housing allowance for their employees. At the same time, enterprises cannot easily expel workers, thus making textile mills lose flexibility in facing demand changes.

Industry experts estimate that this law will increase operating cost up to 30 percent. Enterprises will also have to pay for staff welfare five times higher than the original level.

The enactment of this new law has just come at the time when competitiveness of China's clothing industry is relatively weak. The average annual salary of the employees will increase by 10-15 percent. Although by the standards of the West, the labor cost still remains cheap.

Fibre2fashion News Desk - China

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