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EU firms laud China’s new labour law

Some firms had expressed concern that the draft labour contract law would increase wage costs, give unions too much influence and make it harder to fire workers, making China less attractive for international manufacturers.

The legislation finally passed by parliament on Friday could raise costs because it encourages long-term labour contracts instead of temporary pacts that can deny workers full benefits.

But the law does not give unions the right to block layoffs; instead, they have only the right to be consulted.

The EU chamber said it was not concerned about the impact of the law on European investment in China, which has pulled in more than $1 billion a week in foreign direct investment since it joined the World Trade Organisation in late 2001.

‘Several studies worldwide have proved that labour cost is not the primary factor influencing corporate investment strategy. It is the market size and growth potential that turn out to be the chief reasons for investment influx.

‘The surge of foreign investment in China is a firm rebuttal against the concerns. A more mature legal environment should be considered as an advantage in attracting foreign investment,’ the chamber said in a statement.

Joerg Wuttke, the chamber’s president, praised the drafting process; more than 190,000 organisations and individuals submitted comments on the law, which, if strictly applied, would dramatically improve working conditions in China.

‘In the environmental sector, we see Chinese legislation that is even stricter than European law, yet implementation is sometimes non-existent. 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,’ Wuttke said.

Officials have come under fire for failing to uphold existing labour laws with the revelation in recent weeks that hundreds of poor farmers and teenagers were abducted or lured to work in brick kilns, mines and foundries in central China.