China´s labour costs

UniNews - News Analysis - The convenience of China

Rising labour costs

On June 29, 2007, the National People's Congress approved a new law governing employment contracts, effective as of January 1, 2008.

The aim of the new law was to improve labour relations, highlighting much more clearly than before the rights and responsibilities of both employees and employers.

In this way, efforts were made to fight, if not eliminate, certain unfair practices that in China were rife not so much in foreign companies as in local businesses, by introducing minimum wages set by law, the proper payment of overtime, and employee severance indemnities. Quite clearly, such measures led to a general increase in the cost of labour, which obviously drove up the final cost of goods, especially those tied to labour-intensive manufacturing processes where widespread use of labour is made.

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