China’s new employment law effective Jan. 1 attempts to provide greater protection and benefits for more workers. But what we are already seeing is the creativity of employers to find ways to circumvent the new rules to avoid being saddled with higher costs.
Over the last 12 years, in an avalanche of economic opportunity, about 200 million farmers in China have migrated to the cities, taking manufacturing, trade and construction jobs. (Incidentally, there are about 300 million more of these workers ready, willing and able to migrate over the next 20 years).
This mass migration has overwhelmed the regulatory authorities who are trying to make working conditions safe and sane, and assure that compensation and benefits are provided that China thinks are reasonable. In China, market powers only go so far. China’s always lax regulatory regime has not been up to the job as the many pay and working-conditions horror stories can attest to. [Full Text]
Donald H. Straszheim is vice chairman of Roth Capital Partners in Los Angeles.