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China prepares for historic labor law reforms - more rights and better protection for workers mark shift towards global standards

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Zurich (ots)

- The complete research study can be dowloaded free of charge 
as a pdf at 
http://www.presseportal.ch/de/pm/100013870/adecco_institute/?langid=2
First-ever joint European-Chinese study on the Chinese Labor
Market illustrates modernization and reveals severe skills shortage
and ageing problem
China is in the midst of its biggest ever
modernization of labor laws and labor market regulation, starting to
come into force on January 1, 2008. The labor reforms grant the
individual worker more employment protection rights enforceable by
law and mean more legal certainty for foreign employers. The reforms
are getting underway while China is facing an increasing lack of
skilled workers and a rapidly ageing workforce, threatening to be the
biggest dangers in securing long-term economic growth. These are the
findings of the first-ever joint European-Chinese research study on
the Chinese labor market by the Shanghai Academy of Social Sciences
(SASS) and the Adecco Institute (London), done in cooperation with
the University of Warwick (UK) and published today in Zurich,
Switzerland.
"We regard the planned Chinese labor law reforms as a breakthrough
and big leap towards International labor market standards. Collective
wage agreements, employment rights that are enforceable by law, and
dismissal protection no longer remain taboos in China. The new labor
laws have unmistakable German and British flavors. It is a good
example of China's increasing openness to adopt foreign best
practices", said Wolfgang Clement, Chairman of the Adecco Institute
and former German minister for Economics and Labor.
China's labor reforms focus on individual employment protection,
emphasizing written labor contracts, employment promotion, labor
dispute conciliation and arbitration, equal pay and long-term job
security.
"While the new laws may contribute to raising unit labor costs
over time in China, for example through salary rises, there will also
be significant benefits to foreign firms, giving corporate leadership
more clarity and certainty about the future direction of Chinese
labor regulations," said Peter Siderman, Managing Director of the
Adecco Institute.
The new laws provide a strategic roadmap for the next 10-15 years.
They will slow the rapid rate of workforce turnover and bring more
procedural transparency to labor dispute resolution. They provide
better protection for trade secrets and incentives for employers to
invest in vocational training for workers. They also permit new forms
of flexible work and third-party labor placement.
"Perhaps most importantly, the Chinese government will enforce new
labor laws across all provinces in a more effective way than until
now. This would be one of the most spectacular, confidence-building
reforms in new China", Siderman added.
Skill shortages slow growth
The reforms come partly in response to a growing skills shortage
and a rapidly ageing workforce. While unemployment among unskilled
workers is rising, the shortage of skilled workers leads to severe
recruitment and retention problems for both foreign and local
businesses. China faces a lack of qualified personnel across a huge
range of activities, from manufacturing to professional services.
Skills shortages in middle and senior management already begin to
slow down growth in some areas.
The study shows that the labor market faces growing supply
constraints in five key areas of skilled labor: management talent,
English language skills, R&D personnel, senior and secondary
technically skilled workers and holders of professional certificates.
Despite nearly 5 million new university graduates annually (in
engineering alone, China produces 600,000 graduates versus 70,000 in
the US) foreign firms do not find job applicants of sufficient
employability, and only 10% of graduates meet the English language
requirements of foreign companies that now account for more than 20%
of all local job opportunities.
"Higher education graduates' employability would rise faster if
China focused on equally improving education quality as well as
quantity. In both Europe and China, governments, schools,
universities and companies must start to build bridges from school
into the world of employment. The hermetic seal between these two
worlds is a big driver of skills shortages", commented Wolfgang
Clement.
Ageing Workforce
The study also illustrates that China's workforce is ageing
rapidly, as is also happening across Europe and Japan, but is unusual
among big Asian countries. The Chinese workforce will grow by less
than 5% from now until 2015. By then one third of the population will
be over 50 (while 60% of India's will be under 30). China's labor
pool aged 20-24 will fall after 2020. Just as in Europe, China will
over the next 10 to 30 years face a large scale exit of experienced
people from the labor force and extra fiscal burdens with fewer young
people joining companies and continued huge numbers of unemployed low
skilled people.
For the full version of the study please visit:
www.adeccoinstitute.com
About the Adecco Institute
The Adecco Institute, based in London, is a think tank on the
future of work. Its chairman is Wolfgang Clement, former German
Minister of Economics and Labor (2002-2005); its Managing Director is
Peter Siderman. The Adecco Institute is committed to facilitating
discussions on the topic of work. Through primary and secondary
research as well as white papers and forums for discussion, the
Institute provides forward-looking approaches to help companies and
economies raise employability, productivity and employee satisfaction
at work.
About Adecco
Adecco is the world leader in human resources solutions with a
turnover of 20.4 billion Euro in 2006. The Adecco network consists of
37,000 employees and 6,700 offices in more than 70 countries and
regions and employs more than 700,000 people every day. The company
is headquartered in Switzerland and provides a unique offer of
flexible human resource solutions to its business clients and
qualified partners.

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Axel Schafmeister
Tel.: +41/43/819'39'31
Mobile: +41/78/714'80'10
E-Mail: Axel.Schafmeister@shepard-fox.com

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