[Comprehensive] "Labor Contract Law" or welcome to the second revision of the contract without a fixed term dispute

[Ministry of Human Resources and Social Affairs stated that there are some disputes in the implementation of the Labor Contract Law with respect to legislative purposes, non-fixed-term labor contracts, economic compensation, etc. The next step will be to conduct a comprehensive assessment of non-fixed-term labor contracts, etc., based on research and evaluation. Proposed amendments to the Labor Contract Law. ]

The Labor Contract Law may usher in a second amendment.

On November 7, the Twelfth National People’s Congress Standing Committee held the 24th meeting of the “Report on the Deliberation of the Proposal Proposed by the Delegate of the Bureau of the Fourth Session of the Twelfth National People’s Congress to the Fourth Session of the National People’s Congress” (below). "Report").

Some media claimed that the "Report" involved the Fourth Session of the Twelfth National People's Congress held in March of this year, and 10 "Proposals on Amending the Labor Contract Law" submitted by representatives of many people's congresses. The Ministry of Human Resources and Social Security stated that there are some controversies surrounding the purpose of the labor contract law, non-fixed-term labor contracts, economic compensation, etc. The next step is to conduct a comprehensive assessment of non-fixed-term labor contracts, etc. Based on the proposal to amend the labor contract law.

Since the formal implementation of the "Labor Contract Law" on January 1, 2008, the dispute has not stopped. Lou Jiwei, the former retired finance minister, has repeatedly stated that he needs to amend the law to increase the flexibility of China's labor market.

The Political Bureau meeting of the CPC Central Committee, which was held at the end of July this year, has listed the three major priorities of “cost reduction” along with the increase of labor market flexibility, the suppression of asset bubbles, and the reduction of macro tax burdens.

The industry generally believes that the problem of insufficient flexibility in China's labor market cannot be attributed to the "Labor Contract Law." However, some provisions of the law have obviously increased the rigidity of the labor market.

"No fixed-term contract" leads to dispute

The above 10 "Proposal on Revising the Labor Contract Law" proposed that the current Labor Contract Law pays attention to protecting the interests of laborers and ignores the rights and interests of enterprises. The signing of an unfixed term labor contract does not conform to the actual conditions of the laborers. The situation should be appropriately increased labor costs of default, while the construction industry migrant workers outstanding problems, the lack of legal basis for the implementation of the wage guarantee system, it is proposed to amend the labor contract law.

The "Report" adopted on November 7 said that the National People's Congress Finance and Economic Committee recommended that the Ministry of Human Resources and Social Security further study the opinions of representatives, strengthen research and demonstration, speed up the progress of work, and propose amendments to the law at an appropriate time.

Lou Jiwei said at the 2016 annual meeting of the China Economic 50 People Forum held on February 19 this year that the next step is to amend the Labor Contract Law, keep a reasonable place, remove the overly rigid part, and ensure flexibility in the labor market, reflecting the enterprise Balance with workers.

Among them, the "unfixed-term labor contract" is considered to be the representative clause of the "rigid part" of the law from the date of the birth of the "Labor Contract Law." A non-fixed-term labor contract means that the employer and the employee agree on a labor contract with no definite termination time. Article 14 of the "Labor Contract Law" stipulates that there are three situations in which an employer and a laborer can agree on one another and can conclude a non-fixed-term labor contract. Among them, the “contractually signed two fixed-term contracts must be free of fixed-term labor contracts” This clause was controversial when the “Labor Contract Law” was drafted. The original intention of the law was to improve the stability of the labor market because In the legislative process, there is a short-term employment situation in the labor market. Many companies and employees only sign a one-year labor contract each time. Legislators hope that the law will encourage companies to sign longer-term labor contracts.

However, the First Financial reporter found in the investigation that different companies with different levels of compliance after the implementation of the law had different situations.

The period for companies that implement the law to sign contracts with workers has actually been extended. From one year to three or five years, most of these enterprises are state-owned enterprises and foreign companies, and companies adopt various methods to circumvent this clause. It is more common to use labor dispatch or outsourcing to avoid signing direct labor relations with employees.

In the low-end labor market, where migrant workers are the mainstay, in the eight years of the Labor Contract Law, the labor relations of migrant workers did not appear to be stable in the expected employment, and the proportion of migrant workers who signed labor contracts instead decline. According to the annual "Migrant Workers Monitoring Report" published by the National Bureau of Statistics, the proportion of migrant workers who signed labor contracts with employers or employers in 2015 was 36.2%, a decrease of 1.8 percentage points from the previous year.

Li Qiang, president of the Academy of Social Sciences at Tsinghua University, told reporters that "one-day work" is becoming a more and more common employment method in the southeastern coastal areas. As soon as a labor contract is signed, social security needs to be paid for employees, but the cost of social security benefits is too high. Adopting the "one-day-work" approach has recruited workers and legally circumvented the requirements of labor laws in social security.

Zhang Yan, an associate professor at the Guanghua School of Management at Peking University, said in an interview with First Financial that due to a lack of expectations for long-term work, migrant workers’ wage requirements during “short-term work” are much higher than those for “long-term work”, and sometimes “short-term work”. "The wages can be as high as "long-term workers". Workers are also willing to do short-term jobs. This creates a "win-win" balance in the labor market.

An industry source told this reporter that although the Labor Contract Law has set a very high legal standard, due to lack of law enforcement during implementation, it has caused "unbalanced happiness" among different enterprises: state-owned enterprises, Labor costs of law-abiding enterprises such as foreign companies have soared. State-owned zombie companies have been unable to lay off their employees. Recently, foreign companies have begun to shift to Southeast Asia. However, private companies have evaded the requirements of the law through various “allegative” methods and have won competition in the market. Advantage.

The double-edged sword of labor market flexibility

Lou Jiwei believes that the constraints of the "Labor Contract Law" on enterprises have, to a large extent, reduced the flexibility of China's labor market, which is not conducive to the improvement of total factor productivity, and ultimately leads to low labor productivity.

Due to the obvious fragmentation of the labor market in China, the excessive flexibility of the use of small and medium-sized enterprises and private enterprises and the excessive protection of large-scale enterprises and state-owned enterprises and employers have coexisted. This has caused the revision of the Labor Contract Law into a more complicated situation. It is based on this situation that Lou Jiwei believes that it is difficult to reach a consensus on the amendment of the "Labor Contract Law."

In Zhang’s view, in the process of increasing the flexibility of the labor market, we should also pay attention to the changes in the income of laborers. For white-collar workers, the increase in employment flexibility may have little effect on them, but it is mainly for migrant workers. For the labor groups, this may mean that the working hours are reduced, or the income is reduced. In this way, although the cost of the business is reduced, it also hurts the interests of the workers.

Li Qiang believes that "short-term work" is not conducive to the training of labor skills. Enterprises that are the subject of skill training worry that the employees will be changed after training. They are not willing to pay a cost in this respect. If China's huge labor market is difficult to stabilize through professional groups, the consequences are worrying.

Zhang Yun also said that if China's manufacturing industry maintains its current level, the workers are also satisfied with the job training for the first three or five days. Due to the reduction in labor supply, the current labor market can maintain balance. However, the State Council has already launched the "Made in China 2025" plan. The shortage of skilled personnel training caused by the short-term employment will become a major problem in the upgrading of manufacturing industries.

However, the situation is stronger than people. According to industry insiders, 40% of China’s new jobs are already flexible employment. Legislators should formulate laws and regulations suitable for flexible employment based on the actual conditions of the labor market, instead of artificially setting excessively high standards.