China’s draft labor law worries foreign firms
By UNITED PRESS INTERNATIONAL
Published March 21, 2006
BEIJING — A proposed Chinese labor law has foreign companies worried that China is giving power back to the state-backed trade union.
According to a draft of the Labor Contract Law, released late Monday, the union would have to be consulted about mass layoffs and approve companies’ rules for employees. It also would have the right to negotiate on behalf of workers through collective bargaining, the South China Morning Post reported Tuesday.
State media said the National People’s Congress had invited public comment on the draft law for next month, after the full text was posted on the NPC’s Web site.
Companies claim the proposed law marks a step backward for China’s economic reforms by taking away flexibility in hiring and firing.
The law requires companies to pay a full year’s salary to employees departing under “non-compete” agreements, a level far higher than in Western countries.
The planned law also sets the length of probation for new employees and requires companies to make severance payments to workers on fixed-term contracts if their contracts are not renewed.
Criticizing foreign companies for failing to install unions, state media have threatened to draw up a blacklist. Companies also must hand over a mandatory payroll tax to the union.
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