China's legislature adopts labor contract law
China's top legislator Wu Bangguo on Friday urged local governments and trade unions to do their best to protect workers' legal rights after lawmakers voted for a labor contract law.
The Standing Committee of the National People's Congress (NPC),China's top legislature, on Friday adopted the labor contract law following the exposure of forced labor scandals in brick kilns in central and north China.
The law, which will come into effect on Jan. 1, 2008, won 145 of the 146 votes. One vote wasn't cast.
Governments and trade unions at all levels should do their best to publicize the law among workers and employers to better safeguard the rights of employees, Wu, NPC Standing Committee chairman, said when the Committee concluded its weeklong legislative session.
He said the law will regulate employers' use of labors and help employees protect their legal rights.
According to the law, officials will face administrative penalties or criminal prosecution for abusing their authority or neglecting their responsibilities that result in serious harm to the interests of workers.
Lawmakers lambasted officials involved in the forced labor scandals in north Shanxi Province and central Henan Province during their deliberation of the draft.
The forced labor scandals made headlines in China this month, sparking outrage among the Chinese public and arousing concern from national leaders. The workers were forced to work long hours without pay in brick kilns, mines and other small industries.
The central government has sent a team of investigators to look into the scandals.
Investigations reveal 2,036 brick kilns were operating without licenses and illegally used 53,036 migrant workers.
Latest official statistics showed that a total of 576 workers have been rescued from illegal brick kilns in Shanxi and Henan and the investigation and rescue work is still continuing.
By June 18, police have detained 168 people accused of holding workers in slavery under appalling conditions at small brick kilns and mines in Shanxi and Henan.
Xin Chunying, deputy chairwoman of the NPC Law Committee, said there have already been relevant laws, including the Criminal Law and the labor law, which could be applied to punish the employers and officials involved in the forced labor scandals.
"The labor contract law makes detailed provision concerning this issue following the exposure of the forced labor scandals," she told a press conference on Friday afternoon.
The draft was first submitted to the top legislature for deliberation in 2005 and released for public suggestions from March 20 to April 20 last year, which was regarded as a major step in the country's legislative transparency. More than 190,000 responses from the public were collected in a month.
The new law is expected to help protect workers' legal rights by demanding a written contract, Xin said.
Under the new law, if employers don't sign a written contract with their employees within a year after the employees start to work for them, it should be taken as that they have signed a labor contract of no fixed term.
"Employers should not force employees to work overtime and employees can terminate the contract without early notice to the employers if they are forced to work by violence, threat or restriction of personal freedom," the law reads.
Xin said such provisions will be useful when workers' interests are harmed.
However, some foreign companies worried the law would increase their cost when the draft was released for public suggestions, Xin said.
"But those who didn't have a record of illegal employment don't need to worry about the increase of cost at all," she said.
Xin also said it is unnecessary for foreign companies to worry over bias in the application of the law.
"If there were some bias, it would be in favor of foreign investors because local governments have great tolerance for them in order to attract and retain investment," Xin said, adding that foreign companies must abide by the law just like their Chinese counterparts.
NPC Standing Committee member Zheng Gongcheng, an expert on labor law, said the labor contract law itself favors neither employees nor employers.
"As a law that gives full protection to workers' legal rights, it also stipulates that employees must shoulder equal duties, such as keeping confidential of the issues concerning employers' intellectual property rights. This is crucial for foreign companies," Zheng said.
There have been 570,000 foreign enterprises in China since the country opened it's door to foreign investors in 1980s, and some 25 million people have been working for them by the end of 2005, according to official statistics.
Survey found that many foreign companies in coastal Jiangsu and Guangdong provinces overworked and underpaid their employees.
It was reported earlier this year that McDonald's, KFC and Pizza Hut in southern Chinese city Guangzhou paid their part-time Chinese employees four yuan (52 U.S. cents) per hour, more than 40percent less than local minimum wage of 7.5 yuan (97 U.S. cents).
The fast food chains were also exposed for failing to sign labor contracts with employees and overworked staff.
June 30, 2007 Washington Post
China Enacts Stronger
New Rules to Protect Abused Migrant Workers
The Chinese legislature passed a law Friday to provide more protection to the millions of farm youths who leave home and become cheap labor in the factories and construction sites that have mushroomed in China's booming economy.
The Standing Committee of the China People's Congress, in approving the law, presented it as a bulwark against widespread abuses of the often-uneducated migrant workers, such as forced labor, withholding of pay and unwarranted dismissal. The country was alarmed two weeks ago, for example, by the discovery that hundreds of Chinese were forced to work in conditions resembling slavery at dozens of brick kilns in Shanxi province while local Communist Party officials did nothing to stop it.
In reaction, lawmakers at the last minute added a provision to the long-discussed labor code to mandate punishment for officials who are shown to be negligent or corrupt in allowing entrepreneurs to abuse workers. This and the unusual public rollout of the new law seemed designed to show the Chinese public that the central government of President Hu Jintao is determined to crack down on corrupt officials and protect those left behind by the swift economic growth of the past 25 years.
"The law is meant to protect the workers and their rights," Xin Chunying, who heads the Standing Committee's labor committee, said at a news conference. The Standing Committee is a permanent body of the China People's Congress, a legislature whose hundreds of provincial delegates meet once a year to voice approval for government policies.
Hu and his premier, Wen Jiabao, repeatedly have ordered crackdowns on negligent and corrupt local officials based on existing law, most recently after the kiln workers were discovered. Laws and regulations have long been in place to protect workers. But as is frequently the case in China, the enforcement of the rules has often been frustrated by collusion between local entrepreneurs and party officials eager to promote economic development and supplement their own bank accounts.
China forbids independent labor unions. The official All China Federation of Trade Unions, tied to the same party bureaucrats, functions as an arm of the government -- and thus of economic development -- more than as a watchdog for workers.
Legislators said one feature of the new law that might help workers is reinforcement of the requirement for detailed contracts spelling out what workers are entitled to in return for their time on the job. Construction workers in particular have found that frequently, after six months or a year on the job, their employers refuse to give them their pay, arguing that development companies ran out of cash and did not provide money to the construction companies.
Migrant workers -- as many as to 900 million have left farms to find jobs -- typically get dormitory-style housing and basic food as part of their benefits. They often work without pay until just before the Chinese New Year, when they are supposed to receive their back pay to enable them to return home and shower their families with gifts.
NYT June 30, 2007
China Passes a Sweeping Labor Law
China's legislature passed a sweeping new labor law today that strengthens protections for workers across its booming economy, rejecting pleas from foreign investors who argued that the measure would reduce China's appeal as a low-wage, business-friendly industrial base.
The new labor contract law, enacted by the Standing Committee of the National People's Congress, requires employers to provide written contracts to their workers, restricts the use of temporary laborers and makes it harder to lay off employees.
The law, which is to take effect in 2008, also enhances the role of the Communist Party's monopoly union and allows collective bargaining for wages and benefits. It softens some provisions that foreign companies said would hurt China's competitiveness, but retained others that American multinationals had lobbied vigorously to exclude.
The law is the latest step by President Hu Jintao to increase worker protections in a society that, despite its nominal socialist ideology, has emphasized rapid, capitalist-style economic growth over enforcing labor laws or ensuring an equitable distribution of wealth.
But it may fall short of improving working conditions for the tens of millions of low-wage workers who need the most help unless it is enforced more rigorously than existing laws, which already offer protections that on paper are similar to those in developed economies.
Passage of the measure came shortly after officials and state media unearthed the widespread use of slave labor in as many as 8,000 brick kilns and small coal mines in Shanxi and Henan provinces, one of the most glaring labor scandals since China began adopting market-style economic policies a quarter century ago.
Police have freed nearly 600 workers, many of them children, held against their will in factories owned or operated by well-connected businessmen and local officials.
Abuses of migrant laborers have been endemic in boom-time China, where millions of temporary workers have faced unsafe working conditions, collusion between factory owners and local officials and unpaid wages. Party-run courts often fail to enforce their legal rights.
Senior leaders in Beijing have grown increasingly concerned about the issue because migrant workers have contributed to a surge in social unrest and violent crime.
While the new law will do little to eliminate violations of existing laws, it does require that employers treat migrant workers as they do other employees. All employees will have to have written employment contracts that comply with minimum wage and safety regulations.
It also moves China closer to European-style labor regulations that emphasize fixed- and open-term employment contracts enforceable by law. It requires that employees with short-term contracts become full-time employees with lifetime benefits after a short-term contract is renewed twice.
Perhaps most significantly, it gives the state-run union and other employee representative groups the power to bargain with employers.
"This is the biggest change in Chinese labor law in the reform and opening period," said Qiu Jie, a labor law expert at People's University in Beijing. "It gives legal protection to the vast majority of workers who had no way to protect their rights under the old system."
Many multinational corporations had lobbied against provisions in an earlier draft of the labor law. The early draft, circulated widely in business and legal circles, more sharply limited the use of temporary workers and required obtaining approval from the state-controlled union for layoffs.
Companies argued that the rules would substantially increase labor costs and reduce flexibility, and some foreign businesses warned that they would have little choice but to move their operations out of China if the provisions were enacted unchanged.
International labor experts said that several of the most delicate clauses had been watered down. But lawyers representing some big global companies doing business here complained today that the new law still imposes a heavy burden.
"It will be more difficult to run a company here," said Andreas Lauffs, a lawyer at Baker & McKenzie, which represents many of America's biggest corporations in China.
The National People’s Congress released only a summary of the new legislation, not the full text, and officials did not detail how they had changed the final version from multiple drafts that had circulated earlier.
The summary said companies must “consult” the state-backed union if its plans workforce reductions, suggesting a softening from earlier drafts that gave unions the right to approve or reject layoffs before they could take place.
But the summary retained language that limits “probationary contracts 試用契約” that many employers use to deny employees full-time status. It also states that severance pay will be required for many workers, and tightens the conditions under which an employee can be fired.
Moreover, the law empowers company-based branches of the state-run union or employee representative committees to bargain with employers over salaries, bonuses, training and other work-related benefits and duties.
In the past, workers have had to negotiate wages with their employers individually. China’s state-run union has had almost no involvement in setting wage and benefit levels.
The Communist Party’s monopoly union, known as the All-China Federation of Trade Unions 中華全国総工会, is a legacy of China’s socialist planned economy. It is an official state organization charged with overseeing workers that in practice has tended either to play no role whatsoever or to help managers monitor and control workers.
Workers are not allowed to form their own, independent unions. The state union rarely if ever presses for higher wages or enhanced benefits. It does not permit strikes.
But Mr. Hu has pressed the union to take a more active role, and it has demanded greater representation in private Chinese and foreign-invested companies. Some foreign company executives say that if the union participates in wage and layoff negotiations it could begin to greatly complicate labor relations.
Foreign executives said that they are especially worried about new labor regulations because their companies tend to comply with existing laws more rigorously than some of their Chinese competitors do. Their competitive disadvantage could increase sharply, they said, if the new rules put fresh burdens on foreign companies that their local counterparts ignore.
Chinese legislative officials said today that such concerns are overblown, and that many local governments bend the rules to favor foreign investors over local companies.
“If there is some bias in the application of the law, it would tend to be in favor of foreign investors because local governments do so much to attract investment,” Xin Chunying, deputy chairwoman of the legislature’s law committee, said at a news conference announcing the new measures.
“The only people who will suffer under the new law are those who violate the law,” she said.