Foreign investors may quit if China tightens up labour law

June 19, 2006

By Christine Buckley, Industrial Editor

A REFORM of Chinese labour laws may lead foreign investors to leave the People’s Republic in favour of rival Asian nations with weaker labour standards, employers have said.

A Bill introducing tough laws that prevent the exploitation of workers, including regulations that exceed some European standards, is heading for the Chinese People’s Congress. The Bill is being tabled at a time of heightened industrial unrest and soaring wage inflation.

Pressure is also mounting on the Chinese Government to reduce the disparity between impoverished areas in the rural west and economic hothouses on the eastern seaboard.

The new Labour Contract Law will be the biggest shake-up yet by China on employment regulation. It will strengthen safety and workplace inspections; force employers to consult with workers’ representatives over significant job cuts and tighten the enforcement of minimum wages that already apply in provinces. It may also cut the maximum working week and impose higher pay rates for overtime.

A draft of the Bill has suggested cutting the maximum working week to 40 hours — eight hours less than in Europe. It has also proposed paying double rates for overtime. In some provinces, a maximum working week of 50 hours is enforced but workers often choose to work 60 hours or longer.


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