Published: 2008-01-24

Wang Yijiang: Don't Interfere with the Labor Market
From Observer, page 41
Translated by Ren Jie
Original article:

Labor economist Wang Yijiang has been awfully busy these past few months. Aside from tending invitations to lectures and programs related to the new Labor Law, he has frequently provided consulting services.

A few days ago, a call from the manager of a Shenzhen clothing factory left a deep impression on him. In light of the Labor Law’s stipulation that employers must compensate workers for overtime work, the factory manager set a new rule barring workers from overtime. The workers were unable to make production quotas and had their incomes adjusted lower, which led them to strike. Ironically, much of the law is actually slanted towards workers, with new rules that tighten open-ended work contracts and strengthen the power of labor unions etc.

An ovesupply of labor in the market has pushed wages down, and with this trend a new labor law seemed reasonable.
But should it be the foundation for legislation? Or is it more important to protect  economic development and keep employment high? Is it actually effective to raise the status of laborers and defend them through legislation? These questions have all drawn fierce debate.

Wang compares some successes and failures in countries’ use of labor laws, and then points out some of the universal experiences among them. He says that not every legislative intervention in the labor markets worked as planned. Long-term unemployment plagues the economy and employee benefits bottom out in these countries, such as in Germany and India, even though the original intention of the law was to defend and help workers. Wang believes this is the most important lesson.

We don’t know how the labor law could be implemented until the judical explanations and details come out. Wang hopes the explanations should be slack and comply with the market economy principle more.

EO: Basesd on international experience, what basic principle should labor legislation follow?

Wang: Almost all countries have labor legislation and have accumulated abundant experiences. Like the rules, some of the laws and experiences drawn from them are universal. There are two principles which decide the failure or the success. One is to make clear the responsibilities of the government and the businesses. The second is that the government should be clear what its own responsibilities are.

Fairness and efficiency are two problems facing society. The government should deal with fairness and businesses should focus on efficiency. The government’s job is to protect the health and security of workers, and defend the signing and implementing of labor contracts.

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