Impact of the Economic Crisis on China’s Labor Contract Law

China has been through 30 years of unbridled growth based on its low-cost labor market structure. During this period, the state’s priority was employment creation. The laws and regulations issued were intended to support the low value-added processing industries that were flourishing at the time, but they were poorly enforced and created an unstable labor supply.

By the end of the 1990’s, Chinese policy makers realized that their economic future did not lie in these low value-added industries and that jobs alone would not ensure the social stability they sought. The strategic objectives of industrial restructuring and social cohesion necessitated the development of longer term, more stable employment relationships – hence the need for labor contracts.

China’s Labor Contract Law (LCL) therefore had two objectives – the need to protect workers and to upgrade industry – and both contribute to the overriding objective in Chinese policy at present, namely to maintain social stability or harmonious society as it is officially described. Read the rest of this entry »