New labour contract law proves to be albatross on neck

08 Jan '09

2 min read

As of January 1, 2009, the controversial "Labor Contract Law" has been extended for one more year and thereby adding more controversies to the already existing economic crisis which has griped the country in the last few months. Some experts had predicted during the drafting of the law, that the long-term and rigid labor contract policy approved by the government would deal a blow to the flexibility of labour relations and instead of helping workers would deal a body blow to the lowest of category of the workforce.

After the implementation of the act in the beginning of 2008, many problems have unfortunately come true in terms of what those experts had predicted. Experts had forecast in December 2007 that according to conservative estimates of unemployment rates under two different labour laws, in the United States and France, increased labour costs caused by the "Labor Contract Law" throughout the country would create a significant impact on employment rates.

It so happened that 150 million surplus laborers could still not find jobs in 2008 and more than 200 million new laborers swarmed into the market looking for opportunities. The impact of financial tsunami on China is beyond expectations. China could lose 25 million jobs under the impact of falling exports and the Yuan four trillion economic stimulus package can create 16 million jobs; but still nine million jobs would need to be generated. Under these circumstances, experts have advised the government to bring amendments in the act.

The original intention of this law was to protect the vulnerable, but the results have proved to be otherwise. Sources disclose that a number of local governments are seriously pondering on the merits of the new act and may ease the terms by utilizing some flexible terms in the "Labor Contract Law" to avoid large scale unemployment.

Fibre2fashion News Desk - China

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