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SCMP Reporter

CHINA shortens the work week by four hours across the country from today in what foreign investors believe is an attempt to create more jobs for the growing number of unemployed.

  Ostensibly designed to improve employee welfare, the new policy will force labour-intensive operations such as hotels and low-cost manufacturing enterprises to hire more workers or raise efficiency to maintain productivity.

  'The official rationale is to give workers one more rest day to promote employee welfare but investors generally think it is aimed at creating more jobs,' said Jungle Wong, manager at Arthur Andersen (Shanghai) Business Consulting Co.

  In a circular issued in March by the State Council - China's Cabinet - employers are required to cut the work week from 44 hours to 40 hours.

  But for some major labour-intensive operations unable to switch immediately to the 40-hour week, a grace period of up to two years has been provided for in the new rule.

  Non-profit bodies such as schools, hospitals and research bodies may implement the change from next May while profit-oriented enterprises may do so by May 1997.

  'Sure, the move will create more employment opportunities,' said Tu Kefeng, a spokesman of the Shanghai Municipal Labour Bureau. 'Given our labour surplus, it can only be good for the economy. But workers will now have more time to shop and spend, which will help the tertiary sector.'   Whether a shorter work week will lead to more spending remains to be seen, but some leading foreign-backed hotels have decided that they are unable to let their employees go on to a 40-hour week immediately.

  'We definitely cannot implement this on May 1 but we're trying to do it by September 1 at the latest, maybe even earlier,' said Beat Wiesmann, J C Mandarin's resident manager.

  The hotel will have to hire between 30 and 40 more people because of the change. It now has 950 employees.

  'There's no way we can switch to the 40-hour week immediately as we need trained staff to operate round-the-clock,' said the resident manager of a five-star hotel.

  The new rule caught many people, including the provincial labour bureau officials, by surprise.

  There were no indications that the change was coming, especially when it was only in January that its first national labour law stipulated a 44-hour week.

   'Before January 1, there was no national labour law stating the number of working hours a week.

   So, in general, people were working six days which, on average, meant 48 hours,' said Mr Wong.

  When the national labour law came into effect on January 1, the 51/2-day week of 44 hours became the norm.

  Analysts estimated that for every 10 people an enterprise hired, it would have to add an extra person to maintain the output or productivity as a result of the change.

  For the new rule to have meaningful impact on employment, it would have to see a substantial rise in jobs in the state sector.

   This section is still the country's largest employer.

  Official estimates put the number of employees hired by state enterprises at 150 million and those by foreign-funded enterprises at 14 million.

  'Based on state sector employment, the new rule should create employment for about 15 million people,' said Mr Wong.

  But, unfortunately, about two thirds of China's state enterprises are in the red and cannot afford to add more workers.

  China's official unemployment rate is about three per cent.

  But analysts said, in reality, the figure could be as high as 10 per cent as many workers in money-losing state enterprises no longer worked though they remained on the payroll and drew a portion of their salaries.

  'Theoretically, these people should be considered unemployed but they are not in China,' the analyst said.

  'That disguises the true extent of the unemployment situation here.' 



Cut in working week to create more jobs