China once again enters NPC and CPPCC sessions (Two Sessions) time in March.

During “Two Sessions” last year, Jiang Weidong and other 29 deputies, with Liu Li and other 30 deputies proposed two bills suggesting the Employment Contract Law be amended. With respect to such two bills, Ministry of Human Resources and Social Security of the PRC responded that they would submit their suggestions for amending the law to the National People’s Congress (NPC) Standing Committee at the right moment. [1]

On April 24th 2015, February 19th 2016, and March 7th 2016, Lou Jiwei, the Minister of Ministry of Finance of the PRC, had made three speeches respectively in “Tsinghua Distinguished Speaker Forum on the Chinese Economy”, “Chinese Economy 50-People Forum Annual Conference 2016” and the Press Conference of “Two Sessions”, all of which mentioned that the Employment Contract Law should be amended. Minister Lou stated that the Employment Contract Law reduced the mobility and flexibility of the labor market, which was not conducive to improving productivity, and resulted in imbalanced protection between employers and employees, triggering a heated debate.

The Report on the Work of the Government delivered by Premier Li Keqiang revealed that China’s GDP grew by 6.9% in 2015, lowered than 7.4% in 2014. China’s economy faces considerable pressure from the tendency of going downward.

Considering the above background, at this year’s “Two Sessions”, whether the Employment Contract Law should be amended or not, has become one of the hot topics among the deputies and committees. Not a few of the deputies and the committees expressed their views. The main viewpoints of the deputies and the committees who propose that the Employment Contract Law should be amended include:

  • The Employment Contract Law is ahead of China's current situation which reduces the flexibility of the labor market;
  • The Employment Contract Law overprotects the employees, which is detrimental to the development of enterprises;
  • Certain enterprises are heavily burdened due to the obligatory payment of the Social Insurance Premium.

Some other deputies and committees hold a view that the Employment Contract Law does not have to be amended, and their main points include:

  • From the perspective of which law should be responsible, the current Employment Contract Law is reasonable and overall workable; the high labor cost in enterprises at present is mainly due to the high taxes and fees;
  • The implementation of the Employment Contract Law has no direct relations to the increased labor costs;
  • The root cause of the enterprises’ bearing heavy burdens is not the labour law. The majority of labor cost in enterprises is employees’ salaries.

In the Press Conference held by the State Council Information Office on February 29th 2016, The Minister of the Ministry of Human Resources and Social Security, Yin Weimin, expressed his views when responding to the question of whether the Employment Contract Law should be amended or not. Minister Yin stated that the main problems resulting from implementing the Employment Contract Law were: first, the flexibility of the labor market had been reduced; second, the labor cost in enterprises had been increased. “As the authority in charge, we are now actively researching on the related issue. We will extensively listen to the opinions of all aspects, work on the in-depth research, and put forward our views at the right moment.” Minister Yin said. [2]

We noticed that, the Chairman of the NPC Standing Committee, Zhang Dejiang, listed in his Work Report the main tasks of the NPC Standing Committee for the year of 2016. Through careful reading of this report, we found that the listed main tasks for 2016 include the works on enacting 14 laws and amending 9 laws, in which the amendment of the Employment Contract Law is not listed. Assumed that the Employment Contract Law needs to be amended, the earliest time for it to be listed as the NPC Standing Committee’s tasks for amending laws is in the year of 2017. Before the Employment Contract Law has been officially amended, it has to go through at least one year due to the required prior procedures such as soliciting public opinions and deliberations. Therefore, even if the Employment Contract law were to be amended, the amended version will come out at the end of 2017 at the earliest.