Ariana Eunjung Cha wrote up the impact of the new labor in China a couple days back in the post. Is it a good law? Well the title is "New Law Gives Chinese Workers Power, Gives Businesses Nightmares" which, given the present situation in China, basically means unalloyed good thing.
Wei Hoqiang used to work in a toy factory that forced him to sign a contract it did not let him read. It paid him 30 cents an hour, made him work 100 days without a day off, and kept him in a room that was
ice cold in winter and suffocating in summer. He said he knew he was being taken advantage of, but he was so afraid of his boss’s ire that he stayed for two years...Armed with a landmark new labor contract law that went into effect Jan. 1, employees like Wei are turning the tables on employers in China.
The law -- designed to combat forced labor, withholding of pay, unwarranted dismissals and other abuses -- represents a major victory for Chinese workers who for decades have complained of companies that would stop at nothing to wring out profits. It has prompted legions of workers in recent months to become bolder about quitting and about staging strikes to demand improvements in work conditions and wages...
It has added to the rising cost of doing business in China -- contributing to an exodus of what is estimated to be thousands of factories from places like the Pearl River Delta in southern China, for 20 years synonymous with cheap and abundant labor and the engine behind China’s rapid growth...
Not all of these companies are leaving the country, however. Many say they are moving to less developed parts of China that offer tax breaks and other incentives to offset the increasing costs associated with the new labor law.
Well worth reading the whole thing. Anyways, while the article does compare the worker-business trade-offs I think it makes quite clear that in the places where it’s really coming into force, the situation is still roughly full employment. That isn’t a coincidence, you can probably bet that in the less developed parts of China mentioned above, one of the incentives will be spotty enforcement of the law. The PRC may have a strong central government, but it has fairly weak regulatory regimes and lots of corruption.
Anyways, from the sound of it, the sketchy businesses are finding new people to exploit and the prosperous regions are maturing into economies with more legal safeguards. This will probably be a good thing for everyone involved, the less developed areas will probably initially welcome some of those sketchy jobs.
There probably won’t be that many implications for U.S. companies operating in China. From what I’ve heard, we already tend to be at the top end of employers. What are the implications for U.S. importers? Harder to say, there’s a lot of poor Chinese people out there, although businesses operating in the interior will probably have to rely on less developed infrastructure.
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