Chinese Finance Minister Lou Jiwei has indicated that the Labor Contract Law should be amended to address problems in the labor market and maintain China’s economic competitiveness.
Speaking at an annual conference of economists on February 19, 2016, Mr. Lou said that the interests of employers are not sufficiently protected under current labor laws, and that national policy favoring long-term labor contracts is not suitable for export-oriented and OEM businesses. He noted that current labor law requirements help create an inflexible labor market, and that regular wages increases have overtaken increases in employee productivity. As a result, the economic competitiveness of China has been weakened and the interests of employees have been damaged.
Mr. Lou further suggested that government policy should be adjusted to increase the flexibility of labor markets, and that the Labor Contract Law should not only protect employees, but also strike a balance between employers and employees.
Mr. Lou’s comments echoed a speech he made in April 2015 when he mentioned that shortcomings of the Labor Contract Law decrease employee mobility and flexibility in labor markets. He was quoted as saying that “employees can fire their employers, but employers cannot fire the employees; this is the reason that many investors choose to leave China.” He also stated that while it is a correct policy to promote collective bargaining at the enterprise level, industrial and regional collective bargaining should not be encouraged.
Mr. Lou’s two speeches have attracted wide attention in China. Many observers have concluded that his comments are a signal that the Chinese government may be planning to amend the Labor Contract Law.