Beijing defends new labor rules

China's minister said yesterday that he was confident the country could keep urban unemployment this year below 4.5 percent, despite the challenges of finding jobs for millions of college graduates and a potential downturn in exports.

China aim to create 10 million new jobs this year and find work for 5 million laid-off workers, Labor and Social Security Minister Tian Chengping (田成平) said.

"The situation with employment this year is going to remain stable," Tian told reporters at a media conference on the sidelines of the annual session of the National People's Congress.

A document outlining the ministry's goals for this year targeted an unemployment rate of 4.5 percent, though Tian said he expected the rate to be below that. He gave no more details.

While China's economy grew at a sizzling 11.4 percent last year, the country's leaders have struggled to find enough jobs for the millions who join the work force each year.

That pressure has grown with a huge increase in college graduates. About 20 percent of the 5 million graduates last year had yet to find jobs by the beginning of this year, the Chinese Academy of Social Sciences said.

Tian defended a new contract labor law that employers say has substantially raised their costs, especially in industries with slim profit margins such as toys.

"One can have expanding employment and a good investment environment alongside protection for workers and harmonious labor relations," Tian said. "There is no contradiction."

Tian critics, including foreign businesses and some of China's biggest tycoons, did not fully understand the law and pledged to boost enforcement and communication.

China the law to improve workers' rights amid complaints about unpaid wages and other abuses.

The legislation sets standards for labor contracts, use of temporary workers, layoffs and other employment conditions in a rapidly changing economy

Despite of deliberations ahead of its enactment, many businesses say the law is not suited to China's employment environment and say they could be forced to move to countries such as Vietnam where labor costs are cheaper.

"The issue now is not revision, but full enforcement," Vice Minister of Labor and Social Security Sun Baoshu (孫寶樹) told a news conference.

Despite from employers, some of whom he said might try to "lower labor costs through non-compliance," the law had only been in place for three months and it was too early to consider amendments.

"The added cost of this law is actually very limited," the vice minister said.

Along rising costs, businesses worry the export industry could suffer further from spreading effects of the economic downturn in the US.

The government has said that might not be entirely negative, with more moderate growth helping to ease problems prompted by the accumulation of more than US$1.5 trillion in foreign currency, including pressure on the Chinese currency to rise.