Companies are leaving the coast for the inland or other countries. It's a fact. The departure of Korean firms has been especially dramatic. From AP:
In Qingdao alone, about 200 mostly small and medium-sized factories closed down without paying wages and taxes, said Kim Oh-ryong, deputy director of the China division at South Korea's Ministry of Commerce, Industry and Energy.If you set up a Google news alert for the terms "China" and "labor" you will get a rash of dire pieces from industry publications and bloggers. See, for example, this observation from Seeking Alpha:
Many factories in the Southern part of China will be closing before Chinese New Year and not reopening. The new labor law instituted by the Chinese government is too much for many of the marginal factories to absorb.It is important to note that many of these factory owners, while bemoaning the new Labor Contract Law, are not really reacting to provisions in the law itself, but are focusing on social security payments, wages, hours, emergency exits----stuff they were ALWAYS required to pay! In other words, the new legislation is being read not so much as legislation at all but as an omen of greater government scrutiny.
It may be that companies will calm down. But if they don't, it seems that the Chinese government is not panicking. Beijing knows it has to begin to move beyond its reliance on sweatshops into more high-tech industries---it is simply impossible to compete forever with Southeast Asia on being cheap and it makes no sense to endlessly depress domestic consumption.
China has actually raised minimum wages in many places since the law's passage ( in response to inflation first and foremost, of course). China Labour Bulletin acknowledges that the ACFTU may be starting to take its roles seriously---in Shenzhen at least. CLB has further noted recent prosecutions of company bosses. In an interview with The New Republic's website, Han Dongfang even says (not in quotes):
... the government is starting to sanction NGOs that assist workers, so long as they don't challenge the ruling party.Doubt about implementation of the Labor Contract Law is understandable. Criticisms of the government for not doing enough are always in order. But dismissing the law as completely useless, as some have done, just doesn't match with the reality on the ground.
And it is a disservice to the many activists in China working hard to build on these new opportunities.