China's labor contract law helps combat crisis

BEIJING  -- China's Labor Contract Law helps the country to tide over the current financial crisis as employment had become a key to "living through the crisis in the long run," said a parliament spokesman here Wednesday.

"The current difficulties faced by Chinese enterprises were mainly a result of the global economic downturn," Li Zhaoxing, spokesman for this year's annual session of the national legislature, told a press conference.

Li made the remarks in response to a question that the Labor Contract Law was to blame for the corporate difficulties.

He said the law requires firms to award open-ended contracts to employees who have worked with the companies for 10 years or more, as well as to workers who have completed two fixed-term contracts, to protect them from dismissal without reasons.

It also mandates companies make larger contributions to pension and insurance funds, because many firms had previously derived profits from violating labor rights.

But some people have said such regulations would reduce labor flow, weaken enterprises' vitality and increase the cost of human resources. Some companies even fired employees to avoid awarding them open-ended contracts before the law took effect as of January 2008.

According to Li, the implementation of the law for the past year was "generally good" and "more efforts should be made to carry it out."

"In the current situation, more efforts should be made to coordinate the relationship between employers and employees and encourage them to work together to overcome hardships," he said.

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