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July 25, 2008 12:02:17 PM CDT

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China Braces for Fallout of Labor Law

Posted Jan 1, 08 2:21 PM CST in World,  Business 

(Newser) – Olympus, Nike, and other manufacturers operating on low margins may close up shop in China after the government’s new labor law protecting workers comes into effect today, reports Bloomberg. The law improves worker security, limits overtime, sets minimum wages, and makes it more difficult to hire temporary workers, among other provisions. It "will definitely raise our costs," says one electronics manufacturer's rep.

"We are likely to see more factory closures next year,'' said an exec of an industry group. Companies already are considering moving factories to lower-cost areas like Vietnam, and some asked employees to sign new contracts ahead of the law’s introduction. China’s largest manufacturer of telecommunications equipment, Huawei Technologies, offered new contracts with benefits to about 7,000 workers.

Source Bloomberg

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In this photo released by China's Xinhua news agency, kiln boss Wang Bingbing speaks as he stands trial in the forced labor scandal at the Linfen People's Intermediate Court in Linfen City, north China's...   (Associated Press)
Workers labor to produce canned tangerine to be exported at the Huangyan No 1 Canned Food Factory in Huangyan, eastern China's Zhejiang province Wednesday Dec. 12, 2007.   (Associated Press)
A Chinese labor work at a freight station in Shenyang in northeast China's Liaoning province, Tuesday, Oct. 16, 2007.   (Associated Press)
Workers labor on a construction site for apartment buildings in Beijing in this April 3, 2007, file photo.   (Associated Press)
In this photo released by China's Xinhua news agency, handcuffed five people, including kiln boss Wang Bingbing, second from left, charged involvement in the forced labor scandal stand trial at the Linfen...   (Associated Press)
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