Job protection scares China's
workers By Candy Zeng
SHENZHEN - Even as the Chinese economy
expands, the rights of workers in many
enterprises, including some industry leaders, are
often sacrificed in the name of profitability and
efficiency.
The country's National
People's Congress (NPC), or Parliament, has passed
a Labor Contract Law aimed at better protecting
job security of the employed. However, many
businesses attempting to evade their
responsibilities stipulated in the law before it
takes effect on January 1, 2008 are maneuvering to
change the status of
their current permanent
employees.
Huawei Technologies, one of the
country's leading technology companies and with an
increasing worldwide influence, was ordered by
China's Labor Ministry recently to halt its
practice of encouraging some 7,000 of its
permanent employees who had worked for more than
eight years to resign then be re-employed on
contract. The company claimed it was a bold
strategic move to boost employees' morale.
The abrupt change in employment terms,
though not new in the short history of
Shenzhen-based Huawei, is seen by some observers
as an attempt to evade its responsibilities before
the new Labor Contract Law takes effect. Under the
law, employers have to sign open-ended labor
contracts with employees who have worked for the
same company for 10 or more successive years. The
revision is meant to bring more protection to
workers in an increasingly privatized economy that
before its recent opening more or less guaranteed
work for life.
In late October, rumors
that Huawei was encouraging long-time employees to
resign "voluntarily" turned out to be true when
some staff received an email detailing the new
policy. The company asked workers of eight years
standing to apply for voluntary resignation before
January 1. They could then compete for a new job
and sign a contract valid for a term varying from
one up to three years.
All the
"voluntarily" resigned staff would be well
compensated for the departure, with sums based on
the years they had worked with the company, their
monthly salary and the average annual bonus last
year. These offers are considered better than the
standards stipulated by the effective Labor Law.
Besides cash reimbursement, they could also retain
their qualifications for any stock options they
had been granted.
People affected by the
new policy include the company founder, Ren
Zhengfei. Staff interviewed by 21st Century
Business Herald generally showed their
understanding or even satisfaction with the new
policy. After all, the company is renowned for
good human resources management and the
compensation terms are generous.
It is not
the first time that Huawei, which was set up in
1988 and had US$11 billion in sales last year, has
shaken its staff upside down to boost
competitiveness. In 1996, all middle and top
managerial personnel at its marketing department
resigned before competing for new posts, with some
losers downgraded to ordinary staff. In 2002,
senior managers applied for a salary cut of 10%
when the industry was hit by the bursting of the
information technology bubble.
The
company, which ranks itself among the world's top
three vendors of telecommunications network
equipment in emerging markets, said the voluntary
resignation policy was just another normal
adjustment to its human resources management
rather than an attempt to evade obligations under
the new labor law. It was coincidental that its
new policy was introduced right before the law
came into effect, Huawei said.
The Huawei
resignation policy echoes moves by other companies
to terminate permanent employees before the new
law takes effect. LG Electronics (China) was
reported to have fired workers of more than five
years' standing, at subsidiaries as well as at its
headquarters, right before the Labor Contract Law
was passed on June 29. The company denied any
intention to bypass the law, claiming it was just
a policy adjustment.
In August, some "on
contract" teachers in Shenzhen who had been with
their employers for more than or close to 10 years
were dismissed. These contracted teachers, as
opposed to those that are "officially employed"
and whose employment is more secure being endorsed
by the government, signed annual contracts with
their schools. In another case, about 600 cleaning
workers in Shenzhen who had worked for the same
company for nearly 10 years also lost their jobs.
Some overseas companies appear to be
reacting in a similar manner. US-based retailer
Wal-Mart began to cut the number of its staff at
its Chinese purchasing center by 15% in the second
half of October. It is reported that about 200
people will be fired worldwide, half of whom will
be from its China operations in Shenzhen,
Shanghai, Putian and Dongguan. The company claimed
the cuts were part of a restructuring of its
global procurement operations and didn't specially
target China.
Employers' explanations are
not easing anxieties among the country's workers.
According to a recent online survey by China Youth
Daily, 14.5% of the 2,212 respondents said their
employers intended to rearrange contracts with
long-time workers, and 87.4% disagreed that the
new Labor Contract Law would give protection to
employees.
Expressions of concern in the
media and from the public have provoked
investigations into Huawei and Wal-Mart by the
labor authorities of Shenzhen municipality and
Guangdong province, and by the All-China
Federation of Labor Unions. Even so, the Guangdong
Provincial Labor Department told the media
recently that it had so far received no complaints
from workers at either Huawei or Wal-Mart .
Lu Min, a Beijing labor-capital relations
lawyer, said more enterprises were coming to
consult her before the new legislation comes into
effect. "The new law contains more detailed
definitions of the rights and obligations of the
enterprises and employees. Some came to draw up
labor contracts as they didn't have any before,
while others wanted us to remedy contracts
according to the new law," she said.
Some
lawyers argued that Huawei could have
misunderstood the new regulation. According to the
Labor Contract Law, employers can discontinue
open-ended contracts under some circumstances,
including severe defaults by employees and for
economic reasons.
Labor Minister Yan
Baoqing said at a November 8 seminar in Shanghai
on the theory and practice of the Labor Contract
Law that the resignation of the 7,000 staff of
Huawei didn't mean discontinuity of employment. An
elaboration on the Labor Contract Law to be worked
out by the year end will carry definitions on the
calculation of working time within one company, he
said.
Chang Kai, a professor and labor law
expert with the Renmin University of China in
Beijing, said the new labor regulations aimed at
balancing the relationship between the employer
and the employee against a background that has
seen labor disputes increase 30% annually in
recent years. Labor Ministry figures show that the
number of labor disputes increased 13.5 fold from
1995 to 2006.
An NPC survey on
implementation of the labor law found that fewer
than 20% of small-and-medium-sized private
companies had signed contracts with their workers,
while 60% of the contracts used by those that had
them were short term, lasting one year or less.
Chang believes that the competitiveness of
a country or enterprise based on low labor costs
cannot last long and advises enterprises to comply
with the law while improving management and
operation abilities against benchmarks of
international practices.
Candy
Zeng is a freelance journalist based in
Shenzhen, China.
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