New Rules Issued for Layoffs

February 12, 2009 Posted by China Briefing Reading Time: < 1 minute

Feb. 12 – China’s State Council has announced new rules that will require companies to report to local labor authorities one month in advance before implementing layoffs.

The move signals the government’s concern on increasing unemployment rates due to the global slowdown. According to China Daily, a company planning a layoff of more than 20 people or 10 percent of its workforce must submit a written report to local labor authorities, a month in advance.

It added that any layoff, regardless of how many workers involved, must be reported to the state-controlled labor union.

The new rules also cover tax incentives to be given for downsized workers wanting to set-up their own businesses and companies hiring laid off workers.

Mass unemployment has been an urgent concern for the Chinese government as an estimated 20 million migrant workers are now unemployed because of declining export demand. In Guangdong, only 4,388 toy factories remain compared to the previous 8,610 as factories were forced to close down.