Beijing, March 11

China’s labour protections are coming under fire from high places as economic restructuring pits officials concerned about social stability against a lobby arguing inflexible policies are stifling job creation and suppressing wages.

Company executives, especially at foreign or private firms, have long been critical of labour contract legislation and minimum wage laws that make it difficult for owners of an ailing business to turn it around or find willing buyers.

Now policymakers anxious to modernise China’s slowing economy and slash overcapacity in heavy industry are making similar noises. The export powerhouse province of Guangdong, a trillion-dollar economy that often leads the way on market reforms, said on Tuesday it would scrap scheduled rises to local minimum wage in 2016, and keep it at 2015 levels — slightly over 1,500 yuan per month — through 2018.

On the same day, the official Xinhua media service highlighted comments by Finance Minister Lou Jiwei, who criticised China’s Labour Contract Law in a speech during the annual meeting of parliament.

The law dates to 2008, when China had a reputation for sweatshops staffed by underpaid staff, an embarrassment for a ruling party that monopolised power in name of socialism. The law fixed a 40-hour work week for most employees, regulated maternity leave, and required businesses to be able to prove their case for sacking employees for incompetence or criminality or face heavy penalties.

Chinese wages have since shot up at double-digit rates, and some think labour protections are hampering an economic transformation that will benefit workers in long run.

“For enterprises and employees, the extent of protection afforded by Labour Contract Law is unbalanced,” Lou said, adding it encouraged firms to moves jobs from China.