Written by Geoffrey Crothall, editor of the China Labor Bulletin, from Wall Street Journal Asia:
China’s Labor Contract Law is one of the most controversial pieces of legislation enacted in China this decade. It provoked a storm of criticism from both the domestic and foreign business community, who now claim it has led to the demise of 10,000 factories in the Pearl River Delta alone since it went into effect on Jan. 1.
The factory closures, in reality, had more to do with rising material and transport costs and China’s appreciating currency. However, because the law does give China’s workers more rights, it means workers have much firmer legal ground to stand on when seeking redress for violation of their rights. That has implications for companies doing business in China. And how smoothly the law is implemented has implications for Beijing.