Factory owners told to boost sales to counter higher costs from new labour contract law
A Guangzhou municipal government decision to halt a spate of sackings in the run-up to the new labour contract law has given notice to manufacturers that they can no longer cut corners but should seek lawful options.
Tens of thousands of factory owners across the border should step up efforts in spurring sales, lowering costs, boosting efficiency and carving out new markets instead of resorting to massive lay-offs to avoid higher labour costs brought about by a new nationwide labour contract law that takes effect from January 1, according to market observers.
The lay-offs in industrialised Guangdong were so severe in the past two months that the local government was prompted to require companies planning to fire more than 20 staff or 10 per cent of their workforce to inform Guangzhou Labour and Social Security Bureau in advance, Xinhua reported yesterday. The rule, effective from last Friday, lasts until the end of this month.
'The message is clear - no more corner-cutting,' Hong Kong Trade Development Council chief economist Edward Leung Hoi-kwok said. 'News of the law has been in the market for a couple of years and manufacturers should face the fact that they can no longer compete solely on costs.'
Jane Li Jianzhuan, a lawyer with Zhuhai-based D&S Law Firm, was not surprised to see more disputes between employers and employees during the transition into the new law, which defines welfare standards and the responsibilities of employers and employees by binding the two parties to a labour contract.
Key areas to be covered by the new law include work hours, extra-shift compensation, commission and wages, holidays, arrangements for parting and other benefits.