In the wake of the labor scandal that struck China a couple of weeks ago, the Chinese government just passed a new labor law that strengthens labor protections. The law will restrict the use of temporary and migrant workers and allow unions to bargain with employers over salaries, training, benefits, etc.
Four points are worth stressing: (1) The increasing risk of labor unrest is pushing the Chinese government to make pro-labor reforms regardless of foreign demands and pressures.
(2) Although Western consumers can pressure multinational corporations investing in China to abide by core labor standards, foreign investors actually lobbied to water down the new law on grounds that it would make the Chinese labor force less competitive.
(3) The new law allows collective bargaining for wages and benefits but still forbids independent unions that would challenge the Communist Party’s monopoly; insofar as official unions have generally protected managers rather workers, one may wonder about the actual effects of the reform.
And (4) it remains to be seen whether the law will actually be enforced; several observers have pointed out that many previous labor laws were strict on paper but not enforced.
