Cautious welcome for China labour law

By Jamil Anderlini in Beijing and Geoff Dyer in Shanghai

Published: July 1 2007 18:31 | Last updated: July 1 2007 18:31

Foreign chambers of commerce and labour activists on Sunday welcomed an overhaul of China’s labour law, but said poor implementation of existing laws meant it was unlikely to improve working conditions in the near future.

The law, first drafted almost two years ago, was passed by the Standing Committee of the National People’s Congress, the rubber-stamp legislature, just weeks after a scandal over the discovery of slave-labour brick kilns in central China.

Last month the tightly controlled state media reported that hundreds of children and adults had been abducted and were working as slaves in Dickensian brick factories and mines across central provinces. The revelations strengthened the hand of officials pushing for stronger worker-protection provisions.

In response to the scandal, a clause was added to the legislation mandating punishment for state officials who overlook or tolerate labour rights violations.

The law, which comes into effect on January 1, sets standards for mandatory labour contracts, lay-offs and severance payments, and grants more power to China’s state-sanctioned labour unions.

Andreas Lauffs, a lawyer at Baker & McKenzie and a specialist in Chinese labour issues, said that companies in China would have to award permanent contracts to employees after they have completed a probationary period, as under Chinese law, the circumstances for laying off workers were very limited, helping employees gain “long-term, secured” employment contracts.

The American and European chambers of commerce in Beijing praised the law and the unusually transparent consultation that preceded it, but were sceptical it would actually be enforced.

“The most important point is implementation of the law. In the environmental sector, we see Chinese legislation that is even stricter than European law, yet implementation is sometimes non-existent,” said Jörg Wuttke, chairman of the European Union Chamber of Commerce in China. “A large gap between legislation and local governments’ ability to implement laws has a detrimental impact on the credibility of the rule of the law.”

Foreign companies often complain they are put at a disadvantage by complying with laws that are ignored by domestic rivals.

When the first draft of the law was published last year, it prompted heavy opposition from groups representing multinationals. Some said it could convince companies to invest elsewhere. However, the same groups said the second draft took into account many of their criticisms.

The China Labour Bulletin, a Hong Kong-based NGO, said the law was “laudable” but agreed that without government en­force­ment, widespread labour abuses would continue.

Most workers in the growing private sector, particularly mi­grants from poorer inland provinces, have no kind of contract with employers, while employees at state-owned enterprises must join the government’s monopoly All-China Federation of Trade Unions, which forbids strikes.

Copyright The Financial Times Limited 2008