Finance Minister: lower wage and more flexibility

On the Labour Contract Law, China’s Finance Minister was explicit in his criticism during this year’s People’s National Congress. On wages: “In recent years the increase in workers’ income has been faster than the increase in productivity. This is not sustainable.” Clearly in the Minister’s mind is the rising labor costs in manufacturing and capital flight. Also criticised is “labour market inflexibility“: “The current Labour Contract Law is based on fixed working hours, so it is difficult for companies that need flexible workers.” This is said in reference to China’s planned shift from the manufacturing to the service industry as the key driver of growth. The service industry is to be built on highly casualised labor – as if it is not already so. But watering down clauses on contract length and severance pay will go a long way for businesses to increase their use of casual workers without fearing financial consequence. Interesting timing also, as Chinese companies are legally obliged from March 2016 to limit the use of agency workers under 10% of the labour force. The speculation that companies will simply turn these workers into “outsourcing” without actually reducing casualisation turns out to be well-founded; and some workers are already protesting.

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