New Chinese labour laws may force flight of foreign investment

Overseas companies may no longer find China a lucrative country to set up manufacturing units after the newly-drafted labour laws in southern China's Shenzhen special economic zone (SEZ) wer e introduced, aimed at empowering workers to collectively negotiate higher wages.

The draft law scheduled to be reviewed this month, allows workers in the manufacturing hub of Shenzhen SEZ to collectively bargain for higher salary if the wages of the majority of workers are less than half the average pay level in the city.

The average monthly wages for factory workers in the city are about 3,900 yuan ($560), while workers at most of the manufacturing units at Shenzhen SEZ are paid between 1,100 yuan ($146) to 1,500 yuan ($220).

The new labour draft comes after the Shenzhen SEZ was hit by a series of wage disputes mainly at Japanese auto parts units that saw production grinding to halt until the companies agreed to hike wages.

The new laws would allow workers at Shenzhen SEZ demand wage hikes of as much as 70 per cent in order to bring their salary level to that of city workers.

Labour strikes started in May in Shenzhen SEZ and in nearby cites in Guangdong province, affecting parts suppliers of Japanese carmakers like Honda and Toyota. (See: Honda plants in Foshan,China remain closed as workers strike for better wages) and (See: Honda faces strike at another Chinese plant)