Key issue for China's new labor law: enforcement

The comprehensive labor law that China's top legislative body passed Friday includes provisions that have appeared in previous legislation. But what may be different this time, some observers say, is the government's willingness to enforce mandates protecting workers' rights.

Scheduled to come into effect on Jan. 1, 2008, the law stipulates that employment contracts must be put in writing within one month of employment. It also says that employers must fully inform the worker of the nature of the job and of their working conditions and compensation. Furthermore, it limits the ability of employers to use temporary laborers.

But the law's impact lies in how the government interprets and enforces it. "As is always the case with China's laws, the real question will be in whether the new laws are enforced, how they are enforced, and against whom they are enforced," says Dan Harris, an expert at the law firm Harris & Moure.

But, he adds, "there is a feeling the new labor law is more likely to be enforced than the old and, in particular, will be enforced against foreign companies."

Indeed, organizations representing firms doing business in China have objected to certain provisions they say are unclear. In comments last year, the US-China Business Council warned, "The Draft Law may … reduce employment opportunities for PRC workers and negatively impact PRC's competitiveness and appeal as a destination for foreign investment."

On Friday, Xin Chunying, the deputy chairwoman of the National People's Congress Law Committee, tried to allay the fears of foreign companies. "If there were some bias," she said, "it would be in favor of foreign investors because local governments have great tolerance for them in order to attract and retain investment."

The law gives oversight power to labor unions for collective agreements and the implementation of new employment regulations, but because independent labor unions are illegal in China, this duty will fall to the government-sponsored All China Federation of Trade Unions, an organization with deep ties to the Communist Party and local government officials.

Since the first draft of the law was made public in 2005, it has gone through three drafts and elicited more than 190,000 comments from the public.

In a statement issued Sunday, the European Chamber of Commerce welcomed the law's passage, in part because it moved the labor market in the direction that many European countries have gone. According to a statement posted on their website, "After the comprehensive drafting process, the European Chamber is not concerned about the effect of the law on European investment in China."

Since its emergence as an economic powerhouse more than 20 years ago, China has been dogged by criticisms of poor working conditions, the use of child labor, and willingness to placate multinational corporations.

Friday's law comes as the government tries to deal with these complaints and dampen social unrest in rural areas. Indeed, the government is in the midst of a campaign to reduce the impact of the recent discovery of slavery-like conditions in Shanxi Province's brick factories.

Early last month, more than 400 parents from Henan Province whose children had been abducted posted an open letter on the Internet. Their children, it came out, had been sold to work in brick factories in Shanxi Province.

It has since been revealed that thousands of others have met similar fates at brick kilns, many of which are unlicensed After Chinese journalists picked up the story, it rapidly spread around the world, causing outrage and shame in China.

Last week the draft law was amended to punish officials who ignore labor abuses with prison time or other penalties. Ms. Xin said that "The labor contract law makes detailed provision concerning this issue following the exposure of the forced labor scandals."