By Song Hongmei
Updated: 2008-03-12 17:11

China's employment outlook has dropped significantly after the country implemented a new labor law, hitting its weakest level since Manpower Inc began a quarterly survey of the job market in 2005, the employment services provider said Tuesday.

The survey, which questioned 4,055 employers in seven major Chinese cities including Beijing, Shanghai, Guangzhou and Chongqing, showed that although the outlook slumped, China's net employment outlook for the second quarter of this year still remains positive at 8 percent.

The figure stands for the difference between those firms adding jobs and those reducing them, according to Manpower.

But the net employment outlook, after a seasonal adjustment, represented a 7 percentage point decrease compared to the first quarter this year and an 8 percentage point decrease over the same period last year.

Lucille Wu, managing director of Manpower Greater China, attributes the decline to the implementation of the new Labor Contract Law, which became effective on January 1 this year.

"The law is further regulating corporate employment activities. Furthermore, misunderstandings of some articles of the law also resulted in companies adopting a more cautious approach to hiring," explained Wu. For example, the law stipulates that enterprises must sign permanent contracts with their employees after they have worked there for more than 10 years.

The survey also found that employers in the services sector had the strongest recruitment plans for the third consecutive quarter, as they gear up for the 2008 Beijing Olympics and 2010 Shanghai World Expo.

Manpower added the employment outlook in China's central and western regions was quite impressive, especially in Wuhan and Chongqing, due to their booming services sector.