Recruiting in China

BEIJING — Abundant low-cost labor has fueled China's economic boom. But alongside the success stories of bustling factories and surging foreign investment are widespread complaints of unpaid wages, forced labor and other abuses.

When Beijing set out to tackle those problems by proposing a new labor law in 2005, it ignited a heated debate, prompting warnings that the measure might hurt the economy and accusations that U.S. and other foreign companies wanted to erode workers' rights.

This week, after 18 months of deliberation and a rare government request for public comment on the law, legislators are expected to enact a final version that is meant to set standards for China's rapidly changing labor market.

The law, the most significant change in Chinese labor rules in more than a decade, would set standards for labor contracts, use of temporary workers and severance pay.

The change reflects Beijing's willingness to balance its desire for investment against the need to improve conditions for workers at a time of rising tension over a growing wealth gap, said Ronald Brown, a specialist in Chinese law at the University of Hawaii.

"The question facing the decision-makers often has been, 'What will happen if we have hard enforcement? Will that scare people away and take away our competitive advantage?'" Brown said.

"I think the government has been listening and seeing that maybe it's not going to hurt its competitive advantage, and that it's time, and it's important for social stability."

The law was proposed in December 2005 amid complaints that companies were mistreating workers by withholding pay, requiring unpaid overtime or failing to provide written contracts.

Many complaints are directed at Chinese employers or smaller companies run by foreign entrepreneurs. Major Western companies are regarded as offering the best pay and working conditions. But state media are quick to publicize accusations of misconduct against well-known American and other Western employers.

In April 2006, the government published the first draft of the law and asked for public comment, an almost unprecedented step in a communist system where most lawmaking takes place in secret.

It received more than 190,000 responses from workers and Chinese and foreign companies.

Foreign business groups expressed alarm at proposed restrictions on firing workers, limits on use of temporary workers and a provision giving the All-China Federation of Trade Unions _ the umbrella group for unions permitted by the communist government _ a voice in staffing decisions.

The law is "like going 20 years backward," said the monthly magazine of the American Chamber of Commerce in Shanghai, which represents 1,300 U.S. companies. The U.S.-China Business Council warned that restrictions on temporary employees would be "prohibitively expensive."

Labor activists reacted angrily to the foreign lobbying. The U.S.-based group Global Labor Strategies dubbed companies involved the "sweatshop lobby" and accused them of pushing Beijing to "weaken or abandon significant pro-worker reforms."

Apparently stung by that criticism, the European Chamber of Commerce in China backed away from earlier criticism of the law, declaring in December that it "stands firmly behind the Chinese government's efforts to improve working conditions."

The business comments appear to have prompted Beijing to remove the most contentious provisions. The third draft of the law, the latest version released, no longer requires approval from the official labor body to fire workers.

The Standing Committee of the National People's Congress, China's parliament, votes Friday on a fourth version, and its press office said its law committee recommended approval.

The American Chamber of Commerce in Shanghai declined to comment on the latest draft but its chairman, James Zimmerman, expressed thanks to the government for accepting comments.

"We are pleased that the Chinese government has allowed public participation in the law-drafting process, and believe that this has been a constructive exercise in transparency," Zimmerman said in a written statement.

The proposed law adds to a series of government steps to update China's legal and political systems to keep pace with explosive economic and social change.

A law passed in March ended two decades of blanket tax breaks for foreign investors, equalizing their rates with those paid by Chinese companies.

The All-China Federation of Trade Unions has been setting up branches at hundreds of foreign companies in a campaign launched last year.

The ACFTU often is regarded not as an advocate for better pay and working conditions for employees but as an intermediary that represents employers to workers.

But if the proposed labor law is enacted, it could force the body to act more like a Western-style union by giving it formal responsibilities to stand up for workers, Brown said.

"As these new laws are enforced," he said, "the labor union is likely going to have to accept a larger role as an adversary and an advocate, negotiating better conditions for its members."

On Wednesday, China announced a new crackdown on illegal labor practices following an outcry over revelations of slave labor at brick factories in the country's central provinces.

The two-monthlong inspection campaign starting next week will focus on small-scale kilns, coal mines and workshops, according to a statement posted on the central government's official Web site.

Officials have been ordered to "fix illegal labor practices, attack illegal criminal behavior, conscientiously protect the personal interests of the broad masses of the people, and resolve ... problems of the protection of the rights of migrant workers," the statement said.

China has been in the throes of a slavery scandal that has unleashed a flood of negative publicity against officials in Shanxi and Henan provinces. Hundreds of children and adults were abducted and sold to brickyards in those areas. Operators, often acting with local government protection, beat, starved and forced workers to labor long hours without pay.

Nearly 1,000 workers have been released following police raids in recent months, prompted in part by accusations posted on the Internet that authorities were ignoring such practices.