China's New Labour Contract Law: is China moving towards increased power for workers?

Abstract

China's new labour law is a significant reform that offers workers greater employment security and income protection. It is a product of both unprecedented industrial unrest as well as the Chinese government's decision to move its economy to a higher-wage, higher-technology future. The law has energised many workers, who are now using the courts and the Communist Party-controlled trade unions to press their claims. But the law has also evoked a sharp reaction from many employers, who have sought to circumvent its purposes in two ways. First, they coerce many employees to resign their posts—thereby forfeiting important seniority claims—and then rehire them as new employees. Second, many labour-intensive manufacturers have begun to shutter their factories and shift production to even lower-wage regions of China or Southeast Asia. Although long an instrument of labour control and intimidation, the All-China Federation of Trade Unions has sought to use the new labour law to win for itself a measure of institutional and ideological legitimacy.