By staff reporter Luo Jieqi

From Caijing online

It has almost been one year since the Employment Contract Law took effect. A recent review of the law’s effectiveness by the National People’s Congress (NPC) triggered heated discussion. Although reviewers concluded that the law had increased rates of contract signing, concerns remained.

Without providing statistics, the report pointed out that in catering, entertainment, tourism, construction and other labor-intense industries, rates of contract signing are relatively lower. Rates are also lower in small-to-medium-size enterprises and private ones.

Chen Yongjie, director of research at All-China Federation of Industry and Commerce, said that the Labor Contract Law targets medium-size enterprises. The average size of almost 5.6 million small and medium-sized enterprises is about 12 people. It is hard to engage such small enterprises in the standard contract and salary system.

Guo Jun, minister of the Democracy Administration Department at the All China Federation of Trade Unions, said that due to the economic recession, some local governments have sought to protect enterprises, decreasing effectiveness of the law.

With rising labor costs, more than a few enterprises have tried to evade the law, and the financial crisis only strengthened their motivation to do so. As the labor market worsens, the effectiveness of the law does too.

In the current circumstances, public consensus emphasizes easing the hardships faced by enterprises, especially small and medium-size ones. The idea is that they need exemptions and incentives. 

Various policies aimed at easing hardships faced by enterprises have been proposed. The Ministry of Human Resources and Social Security, Ministry of Finance and State Administration of Taxation have taken measures to stabilize employment and ease economic compensations, by delaying payment of social insurance, decreasing social insurance ratio and using unemployment insurance funds. These policies will free up more than 200 billion yuan for enterprises and secure tens of thousands of workers in trouble.

However, Wang Xiangqian, associate professor of law at the China Institute of Industrial Relations, pointed out that an economic downturn does not necessitate abandoning enforcement of the contract law. As the economy slumps, in fact, it is high time to protect labor rights.

Full article in Chinese:

http://www.caijing.com.cn/2009-01-04/110044550.html