Economic Observer News, March 27, 2012 —
Summary: China’s Labor Contract Law will be amended this year with a focus on regulating widespread outsourcing.
Economic Observer Online
By Jiang Yunzhang (降蕴彰)
Mar 26, 2012
Translated by Pang Lei
Original Articles: [Chinese]
China’s Labor Contract Law is set to be amended this year, only four years after it first came into effect on Jan 1, 2008.
Over the past few years, the All-China Federation of Trade Unions (ACFTU) has been pushing through various channels for amendments to be made to China’s Labor Contract Law.
The union is especially concerned about the large increase in the number workers that have signed labor contracts with intermediary employment agencies instead of directly with the enterprises for whom they actually work, which in many cases are state-owned enterprises.
This outsourcing of the hiring process has meant that many workers do not benefit from the stronger protections that were awarded to them when the Labor Contract Law came into effect in 2008.
According to the current Labor Contract Law, employment companies can only sign contracts for workers engaged in temporary work.
That means employers can avoid contributing to social security plans and can pay them less than workers who have signed contracts directly with their employers.
At this year’s plenary session of China’s National People’s Congress (NPC), which was held in Beijing in early-March, the ACFTU once again made a submission recommending that loopholes in the law, that allow for so many workers to be employed by intermediary agencies, should be closed as soon as possible.
According to what one person within the ACFTU told the EO, these employment practices were initially most prevalent in private, foreign and joint ventures, large-scale state-owned enterprises and a few other special sectors but have now already spread to all industries and sectors.
During this year’s "two sessions," as the simultaneous meeting of both the NPC and the China People’s Political Consultative Conference (CPPCC) is often referred to, CPPCC delegate Wang Xiaolong (王晓龙), the former Chairman of the National Education, Science, Culture, Health and Sports Union, noted how some universities had already begun referring to these employment practices as "advanced forms of employment" and noted that such contracts were beginning to be introduced within the education sector.
Du Liming (杜黎明), another CPPCC delegate, quoted research that showed that 60 percent of companies operating in the finance industry made use of these outsourcing contracts.
According to the same source at the ACFTU mentioned above, at the conclusion of this most recent plenary session of the NPC, it was made clear that the Labor Contract Law will be amended this year and that the practice of outsourcing labor will be strictly regulated.