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Contract law 'boost for social security'

By Zhu Zhe (China Daily)
Updated: 2008-09-20 09:31

Workers have enjoyed better social welfare since the introduction of the Labor Contract Law on January 1, Minister of Human Resources and Social Security Yin Weimin said on Friday.

As of June, the percentage of employees by region that had signed labor contracts was between 90 and 96 percent, up 3 to 8 percentage points from the end of last year, Yin said, quoting figures from 26 provinces, municipalities and autonomous regions.

Meanwhile, the combined value of the five social security funds - pensions, unemployment, medical, work injury and maternity insurance - was 610.5 billion yuan ($89.3 billion) from January to June, up 31 percent on last year, ministry figures show.

"Facts show that the Labor Contract Law is effective in protecting the rights and interests of ordinary workers," Yin said.

The law, passed last June after 18 months of deliberation, is considered the most significant change in the country's labor rules in more than a decade. It makes mandatory the use of written contracts and encourages open-ended ones.

However, criticism of the law has also emerged, especially on the open-ended contracts. Employers have complained the law increases firms' operational costs, as it overprotects workers.

Cao Kangtai, director of the legislative affairs office of the State Council, said employers need not worry.

"An open-ended labor contract is not an iron rice bowl," he told the press conference.

"People can still be dismissed at any time if an employer has grounds to do so."

To clarify the misunderstandings and make the law more applicable, the office issued an implementation regulation for Labor Contract Law on Thursday, which took immediate effect.