Who Needs a Stable Workforce?

Only one day after newspapers reported the opening of a new Wal-Mart distribution center in Tianjin, China, another story appeared:  “Wal-Mart Announces Employee Cuts”.  If Wal-Mart’s venture in China had been conducive to opening a new distribution center “quadrupling the capacity of the original [center]”, why would Wal-Mart need to lay off workers?

The answer may lie in a new labor law which will raise wages and make it more difficult to lay off employees.  Being able to fire workers now, with the possibility of rehiring the workers later with short-term contracts, is one seemingly cost effective way to skirt the new law.  According to one news article, Wal-Mart will pay out only 900,000RMB in severance (or about 120, 700USD).

China’s New Labor Law No Help to Chinese Workers [donga.com (Korea)]

Many Chinese workers could face layoffs in the face of the new contract labor law that will take effect next January. As the new law makes it more difficult for employers to fire their workers and obliges them to pay special retirement compensation, many employers are taking action before the law takes effect. 

Walmart’s procurement center, which employees 1,200 people, were also criticized for letting go 100 workers on October 22. The Chinese media said that half of the job cuts undertaken by Walmart worldwide took place in China.

The new contract labor law places more weight on stable employment, in contrast to the current law, which took effect in 1995. If a worker is employed for more than ten years, his or her job will be guaranteed for life. If a temporary worker has his or her contracts renewed more than twice, the company must guarantee their jobs until retirement age, when it renews contracts for the third time and onwards. The new law states a new provision for retirement compensation, and temporary and regular workers will be paid the same for the same work under the law.
On the whole, companies will experience a 15-percent increase in wages, and it will become more difficult to fire workers.

While Wal-Mart may save money in the short term – the same way it has saved money by forcing workers to work off the clock, hiring underage workers, and denying lunch breaks – there is considerable question about whether Wal-Mart’s layoffs are legal under current labor laws. 

In a related article, experts weigh in on the legality and long term problems associated with this quick fix that Wal-Mart and other firms, like Huawei, have employed: 

Thousands of Huawei Staff “Quit” [China Daily]

“Once this problem is solved, new problems will arise and the costs will mount up,” You Yunting, a lawyer with JoinWay Law Firm in Shanghai, said.  You added that open-ended contracts did not necessarily mean the employees had jobs for life.

According to the Labor Contract Law, employers can revoke the contract under six circumstances, including seriously violating the company’s rules and causing the employer major losses due to serious dereliction of duty or engagement in malpractice for selfish ends.

“I think it’s more important to improve internal governance and the existing rules rather than look for legal loopholes,” You said.

Lu Tong, a researcher at the China Academy of Social Sciences, said: “I think it’s a very bad example. Other companies will follow Huawei’s example and mess things up.”

Xiao Fangsheng, director of the labor law committee of the lawyer’s associations of Guangzhou in Guangdong Province, agreed that Huawei did not have a clear understanding of the contract law.  “It tries to dodge the disadvantages of the open-ended contract but its efforts will turn out to be invalid.

“Even with the new contracts, employees can still enjoy the benefits of open-ended contracts because they never left the company and are still working for the company even if they quit,” Xiao said.

An official at the Shenzhen labor authority told China Daily that an official investigation into the case is ongoing.

Posted by Michael Mignano on Monday, November 05, 2007

COMMENTS

shut up for once and stop balming walmart for all of societies ills.

matthew vantress in gresham oregon
Tuesday, November 06 at 06:24 AM

matthew,

You missed your appointment again at Multnomah County Mental Health. The prescriptions we gave you will last only for another 5 days before you turn into a complete walmart worship droolmaster and circus clown.

Dr. Wing Dat in Gresham Oregon
Tuesday, November 06 at 09:16 AM

I’m Thoroughly Looking Forward to the Day...

I’m looking forward to the day Wal-Mart pisses off the Chinese so much, that they simply will take over Wal-Mart China operations as a downpayment on America’s trade debt.

Wat Went Wong, President and CEO in The People's Wal-Mart of China
Tuesday, November 06 at 10:13 AM

Walmart Watch - a nice little place for racists!

Look in the Mirror...
Tuesday, November 06 at 10:52 AM

shut up dr wing dat and keep shopping at fred meyer,target,kohls and k-mart because you are not smart enough to know and realize that your favorite places and union grocers import the same cheap crap from china that walmart does so shut up and go take your meds.those other places treat their employees far worse than walmart does and has more employees on the public assistance welfare rolls than walmart does i know this because i worked for some of these places and observed this and you cant deny what i observed

matthew vantress in gresham oregon
Wednesday, November 07 at 08:02 AM

You’re Delusional, matthew

Don’t be surprised if the readers on this blog ignore you and stop responding to your rants and tirades.  It’s obvious you have some severe cognitive difficulties, so I’ll be kind and stop here.

ScrewedbyWal-Mart in Anytown, America
Wednesday, November 07 at 08:34 AM

“shut up dr wing dat and keep shopping at fred meyer,target,kohls and k-mart”

I don’t think there are any Fred Meyer stores in San Diego!

SDV is pretty easy to find........just follow the trail o’ stench!

Friend of Matthew in
Wednesday, November 07 at 09:52 AM

F.O.M AND matt the little turd ,brain damaged,infantile little child ,you shut up and if you love wm so much go get a job there they might hire you even though you got fired from k mart.

RDS in
Wednesday, November 07 at 10:17 AM

Why dont YOU just shut up and quit using someone else’s “already established” handle, just so’s you can get yourself a little attention?

Guys like you are as phony as a 3 dollar bill and have nothing to contribute, here!

Buh-bye!

Wally in
Wednesday, November 07 at 12:14 PM

otay bobby

rds in
Wednesday, November 07 at 12:35 PM

you stuff it ,get a life ,same with mattress

BOB wally wizzle in
Wednesday, November 07 at 06:24 PM

you are all big stupid doodooheads to keep shopping at fred meyer,target,kohls and k-mart because you are not smart enough.i got so mad that i threw my best wiggles dvd across the room and broke it when it hit my teletubby.now i have to get a new one at walmart but not at fred meyer,target,kohls and k-mart.big stoopids!

matthew vantress in gresham oregon
Wednesday, November 07 at 07:51 PM

rds is phony and a real hippocrit.he talks good on walmart on some comments and acts stupid and misinformed on others.rds the real you need to stand up.screwed by no one gives a rats you know what about what you say.you walmart haters cant handle the truth i say about your favorite expensive places you are in bed with so you stoop to the childish level of degrading me because you darn well know deep down that i am right.see i have worked in retail and union grocery unlike all you walmart haters on her and i observed a lot of crap.you cant deny or take away what i observed i was there you folks were not.

matthew vantress in gresham oregon
Thursday, November 08 at 06:38 AM

matthew,

“rds is phony and a real hippocrit.he talks good on walmart on some comments and acts stupid and misinformed on others.rds the real you need to stand up”

That is because there are other people using my handle, I am the ‘real’ RDS and posted that way here first!!  My posts reflect your view and the imposter tries to make it look like I’m speaking for both sides, they are trying to make me look bad!!  Therefore, starting today, I will no longer post under the name RDS!!

If you look closely at the posts, you can tell which are mine and which are the imposters!!

RDS in
Thursday, November 08 at 11:20 AM

Relax RDS (the real one)

There are few people who in good conscience could believe the things you believe and say the things you say, regardless of the posting handle they choose to use.

We can all count our blessings there is only one you on this blog!  And by the way…

“ they are trying to make me look bad!!”

Nobody has to make you look bad, RDS.  You’re doing a splendid job by yourself! 

In fact, I have to question the wisdom and judgment of your imposter.  Out of all the bloggers to impersonate, you would be my last choice.

ScrewedbyWal-Mart in Anytown. America
Thursday, November 08 at 12:14 PM

just to piss him off , and it worked.

rds in
Thursday, November 08 at 03:26 PM

rds:Like they always say,"It’s better to be pissed off,than pissed on!” I guess one out of two ain’t that bad....

ddrb in
Thursday, November 08 at 07:18 PM

ddrb,

I enjoy pissing on people, especially people who believe in old fashioned values.  Socialistic values are way better than Capitalistic values, Share the Wealth and we would be better off, if we all lived on a big commune, with everything FREE for everyone, with everyone the same, no rich, no middle class, and no poor.

ScrewedbyWal_mart in Anytown, America
Friday, November 09 at 12:44 AM

Unfortunately in the real world, a pure capitalistic or a pure socialistic society would ultimately fail.  In the case of pure socialism, there’d be little to no incentive for individuals to better themselves or innovate, and in the case of pure capitalism, monopolies would form and have the unchecked power to crush any potential threat to them as well as have the power to oppress the masses.

I know that this a rather simplistic post, but it does point out valid flaws in both systems, and I don’t think that WMW would want a formal dissertation as a post :)

Jason in
Friday, November 09 at 02:23 AM

...with everything FREE for everyone...

That includes sex and drugs, doesn’t it?

Ken V in Texas
Friday, November 09 at 05:51 AM

You Convinced Me, Screw Up!

You were a busy little blogger last night around 1 AM weren’t you “Screwedby?” It’s obvious you didn’t like me peeing on the flag you worship!

I’ll tell you the same thing I told you in your other fake post.  Your annoyances will only get the attention I choose to give them.

ScrewedbyWal-Mart in Anytown, America
Friday, November 09 at 10:01 AM

The Truth Is Somewhere in the Middle

a rather simplistic post

For sure, Jason.  But then, it’s a complex issue and you make a valid point!

ScrewedbyWal-Mart in Anytown, America
Friday, November 09 at 10:10 AM

Jason in : I for one have immensely enjoyed your recent posts.Hope you stay a while!

ddrb in
Friday, November 09 at 10:24 AM

ddrb,
Jason in : I for one have immensely enjoyed your recent posts.Hope you stay a while!

That was unexpected, but thanks.  I try to post when I get the chance.  The last time that I regularly posted, Jim Bunch, Bob in..., and Nick appeared to dominate as WM apologists.  I actually liked arguing with Jim B because his posts were normally rational and valid, and both Jim B and Bob usually remained civil in their posts.

Jason in
Monday, November 12 at 12:08 PM

Screwedby,
The Truth Is Somewhere in the Middle

That’s the sucky part; trying to find the ‘happy medium’ in between.  It seems that every socioeconomic model, even communism ans dictatorships, used to date has both advantages and major drawbacks.  I believe that economically, a regulated free market economy is the best choice, and anything that deals with the infrastructure (power, water, highways, healthcare, etc.) should be government controlled.  The progressive deregulation of infrastructure in the U.S. hasn’t yielded many successes and it seems to have created more misery than advantages.

Jason in
Monday, November 12 at 12:32 PM

Jason in: You’re more than welcome,sir. The progressive deregulation of the banking industry helped to conceive and incubate the subprime housing market debacle,speaking of deregulation. Perhaps a new nomenclature would be helpful-referring to regulations as,” standards”,instead-its far more positive and really conveys the purpose of any regulations,anyway.What do you think,Jason?

ddrb in
Monday, November 12 at 12:45 PM

I’m not sure that the word ‘standards’ would be an appropriate substitute for regulation.  In the case of public water suppliers, for example, they have to conform to a federally mandated minimum water quality standard, but I believe that they’re a deregulated entity.

I haven’t researched the pros and cons of the deregulation of the banking system, but I am rather disgusted at the way that they nickel and dime people to death with some of the dumbest charges conceived!  As far as the sub-prime lending fiasco, would a pre-deregulated banking system have behaved any differently?

Jason in
Monday, November 12 at 03:45 PM

Jason in :I referred in an earlier post,on another thread,to an excellent article by Robert Kuttner,called"What’s Behind the SubPrime Disaster”,Common Dreams.org.(-August,2007.)According to my understanding of the article,the deregulation of the mortgage market created the climate for these types of loans.Perhaps you might want to read it for yourself.

ddrb in
Monday, November 12 at 04:23 PM

Commenting is not available in this content entry.

Comment Policy

WalmartWatch.com reserves the right, in its sole discretion, to remove or refuse to post blog comments.