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Labor law fails to affect textile firms
21
Feb '08
Starting from 2008, the Government of China has decided to carry out new labor law which is expected to increase the salary of workers and in return, hit the profits of textile enterprises.

However, experts believe that a rise in labor cost of about 20 to 30 percent may not incur a serious damage to the industry. This is mainly because, in spite of an increase in the wages of the workers, the salary will still stay low.

Statistics show that during the 11th five year plan, labor cost of Chinese textile enterprises increased by 54.20 percent, which means a rise of 10.84 percent every year. However, exports and profits arising from it, did not get affected because of a relative increase in the productivity of the workers.

While the salary of workers in big enterprises account for 8 to 11 percent of the total income of the company, those in small and medium textile firms are paid even less.

This proves that even if rise in the cost of raw material affects exports, a proportional rise in wages will not have a negative impact on the Chinese enterprises.

Fibre2fashion News Desk - China

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