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Lay-offs alert Chinese labor authorities to "unstable elements" of job market
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08:16, August 12, 2009

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The Chinese economy has shown encouraging signs as indicators released on Tuesday featured expanding retail sales, industrial output and foreign trade.

The country's labor authorities however remained cautious about the job situation and took a variety of measures to prevent job cuts and friction in labor relations.

Gui Sheng, deputy chief of the Beijing Human Resources and Social Security Bureau, told a work meeting on Monday that the "unstable elements" of Beijing's job market might continue to rise this year as economic downturn would lead to "more visible contradictions between labor and capital."

"Employees want stability, but employers want to use more flexibility in job hires. The government expects the people to earn more for a better livelihood but companies with financial difficulties had to axe wage outlays," he said.

Despite the official stipulations on protecting the interests of workers, some companies were still caught shortchanging their employees, said Gui.

He said that the priorities for the rest of the year would be to avoid unnecessary job cuts, corporate bankruptcies and payment defaults.

Under the Country's Labor Contract Law enacted as of Jan. 1, 2008, job cuts in economic downturn must be reported to labor authorities first.

As the Chinese economy started to feel the pinch of global slowdown since last November, companies across the country have begun to register with local governments for job cuts.

In Beijing, about 110 enterprises, mostly footware manufacturers and processors, have filed job-cut reports, involving 7,741 people or 22 percent of their total employees. 35 enterprises dismissed more than 50 people at one time.

In addition to layoffs, Beijing has also reported 52,000 labor disputes this year, nearly twice as much as the number of last year.

In an effort to strike a balance between corporate survival and individual development, Gui said that the Beijing labor authority encouraged and supported financially-strained companies to negotiate salaries with their employees and to avoid dismissals through flexible hires and temporary leaves.

Employees to be dismissed must have access to vocational training which would help them get re-employed. Unemployment welfare should be paid timely and in the full amount, he said.

For companies who have strived to avoid job cuts, the government would subsidize their outlays in social benefits and offer them job stipends, he said.

The Beijing labor authority also ended its annual upward adjustment of the minimum pay this year to lock the bottom line at 800 yuan per month. In the past few years, the adjustments have been routinely elevated in Julys.

But the Beijing government is not the only local authority showing reluctance to raise corporate financial burden. Taking the pay rise benchmarks set by provincial governments for instance, a number of provinces including Shanxi, Qinghai, Yunnan and Guangdong have revised down the official gauge this year.

In a latest revision by the Guangdong labor authority on Aug. 4, the year's pay rise benchmark was reduced from last year's 10 percent year-on-year to seven percent year-on-year.

For the first time, a lower limit for the benchmark was added this year to allow zero pay rises or even way cuts. The upper limit for the pay rises was set at 12 percent.

Experts said although reducing wages of workers would to some extent help companies to overcome the financial hard time, the side-effect was that it would discourage consumption which was not conducive to the country's economic recovery.

China has targeted the year's urban registered unemployment rate at below 4.6 percent. Official figures through June showed the figure had climbed to 4.3 percent from 4.2 percent at the end of 2008.


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