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Labour Contract Law under Attack for Harming Flexibility

On 7 March, during the National People’s Congress, Minister of Finance Lou Jiwei criticised China’s Labour Contract Law for harming the flexibility of the labour market, constraining productivity, and harming workers by reducing job opportunities. Lou stated that the Labour Contract Law restricts the ability of companies to fire their employees and is thus discriminatory towards people entering the workforce. Earlier, on 29 February, Minister of Human Resources and Social Security Yin Weimin had announced that the Ministry is investigating the possibility of revising the Labour Contract Law to tackle the inflexibility of the labour market and high labour costs. With the slowing economy, the Chinese government is also trying to rein in wage increases, favouring business interests at the expense of increasingly discontented workers. China’s Ministry of Human Resources and Social Security recently urged ‘steady and cautious control’ over minimum wages and proposed a formula change that would slow wage increases. Meanwhile, in March, Guangdong province, one of China’s main manufacturing hubs, announced a two-year freeze on minimum wages.

(Sources: Caijing, Caixin, Daily Mail, Wall Street Journal, Zhongguo Xinwen Wang)

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