Academic journal article Indian Journal of Industrial Relations

Impact of Employment Contracts Law on Employment Relations in China

Academic journal article Indian Journal of Industrial Relations

Impact of Employment Contracts Law on Employment Relations in China

Article excerpt

China's Employment Relations

It has been 32 years since China started economic reform and opened itself to the outside world. In the past 32 years, the traditional employment relation in China has changed dramatically. From a micro perspective of enterprises, the amount and the scale of non-public ownership economy developed rapidly, in which the number of employees increased significantly. Therefore, more and more employment relations disputes occurred in the multi-leveled employment system in China, which has been strengthened and expanded. From a macro perspective, a large number of state-owned enterprises restructured, the development of non-public-owned economy rapidly increased, and the size of the output in the entire national economy expanded in recent years. Thus following the continuous expansion of non-public economy the proportion of pluralistic society employment relation in the total employment relation is increasing, along with the impacts and coverage.

In the process towards what is called "socialist market development", the employment relation in China is apparently becoming increasingly conflicting. On the one hand, it is stressed as a result of the development of a modern enterprise based on the operation and management of capital. On the other hand, China's oversupply of labor in volume terms, especially because of industrial restructuring in recent years, further strengthened the labor force supply and demand imbalance, which rendered the employment relation of workers weak. The interest differentiation is increasingly becoming clear between the enterprises and socio-economic strata. The conflict of interest in the employment relation is growing, and the disputes between the two sides continue to rise.

The period from Deng Xiaoping's speech during his famous South China Tour in 1992 to the beginning of the 21st century is the initial formation stage of China's legal system of employment. The "Labor Law" which became effective on January 1, 1995 is the first step in the founding of New China to adjust the employment relation through a comprehensive law. It is also an important milestone in the process of China's labor legislation. Since then, the implementation of "Labor Law" sets a contribution to adjusting the labor relations. Chinese people have great expectations from the employment protection system, but it has clearly not kept pace with the times. The most intuitive performance indicator is: China's labor dispute cases which increased every year, and at the core of many labor disputes is the issue of the contract. A national survey on the enforcement of labor law inspection by the National People's Congress Standing Committee found that small and medium-sized enterprises and non-public ownership enterprises signed labor contracts in less than 20%, individual economic organizations signed even in a lower number of cases. The survey also found that more than 60% of the contracts signed by employers with workers were for the short-term of one year (NPC 2005). Some were signed for a few years; but in the case of a number of factories the phenomenon of wage arrears to workers were found clearly prominent. Some guilty bosses escape and hide after the non-payment of wages. In some companies number of labor will be fixed based on piece units, disguised employees' overtime wages were deducted. Many did not buy social insurance for their workers. Some workers knew that their rights and interests were violated, but chose to remain calm.

The over-emphasis on economic development and the earlier neglect of social justice led to prominent social contradictions and the widening gap between rich and the poor. "Strong capital, weak labor" also emerged. Therefore, the government began to advocate the building of a harmonious society and implementing the people-centered scientific concept of development, to strengthen the countries' active intervention in employment relation, labor social security and further development of the legal system. …

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