China's labor disputes last year nearly double of 2007

Special Report:Global Financial Crisis

BEIJING, March 3 (Chinese media) -- China's labor dispute lawsuits nearly doubled

last year over 2007 because of the economic downturn and the new Labor Contract

Law's adoption, a Supreme People's Court (SPC) senior official said Monday.

The national figure increased by 95 percent year-on-year and the number

nearly tripled in some eastern and southern coastal cities during the period,

SPC executive vice-president Shen Deyong was quoted by Tuesday's China Daily as

saying. Shen did not reveal the figures for last year or 2007.

Shen said the current global financial crisis is one cause of the drastic

increase.

"Many companies fired employees, cut salaries and bonuses, or encouraged

staff to take leave without pay to cut costs in face of the economic downturn,"

he said. "That caused many disputes."

Official figures showed at least 20 million migrant workers have become

unemployed because of the current crisis. Media have also reported many bosses

fled their companies, leaving tens of thousands of workers unpaid.

Another reason for the rise is the Labor Contract Law's enforcement from

Jan 1 last year, Shen said.

The new law requires firms to award open-ended contracts to employees who

have worked with the companies for 10 years or more, as well as to workers who

have completed two fixed-term contracts, to protect them from dismissal without

cause.

It also mandates companies make larger contributions to pension and

insurance funds, because many firms had previously derived profits from

violating labor rights.

But the law has become controversial, as many people have said such

regulations would reduce labor flow, weaken enterprise vitality and increase

cost of human resources. Some companies even fired employees to avoid awarding

them open-ended contracts, which also created disputes.