Legislators review labor law revision on regulating outsourcing

Legislators on Monday started to review the latest draft amendment to the Labor Contract Law, which aims to regulate labor outsourcing and ensure equality in workplaces.

"The key to regulating labor outsourcing is to ensure that outsourced employees receive the same wages as regular workers doing the same jobs," said Li Shishi, vice-chairman of the Law Committee of the National People's Congress.

Li explained the draft on Monday to members of the NPC Standing Committee, China's top legislative body. 

The draft requires employers to pay the same wage to both regular workers and outsourced employees who are sent by employment agencies.

The country is home to about 60 million outsourced workers, accounting for almost 20 percent of the urban workforce, according to a report released in 2011 by the All-China Federation of Trade Unions, the nation's top union organization.

Many outsourced workers earn half the wages of regular employees, and they have fewer welfare benefits than regular workers doing the same jobs, Zou Zhen, director of the social security department under the union organization, told a news conference on Thursday.

In countries such as Japan and the United States, outsourced workers make up only about 3 percent of the workforce, said Zou.

"To address the overuse of labor outsourcing, we should make it clear that it should not be the main means of employment," said Li. 

The draft stipulates labor-contract-based employment is the basic means of employment. Labor outsourcing is supplementary and can only be used to fill temporary, subsidiary and substitute positions.

The draft stipulates employers should strictly control the number of outsourced workers, adding, "Outsourced workers should not surpass a certain proportion of the total workforce".

The proportion is to be decided by the labor authority under the State Council, China's cabinet, it says.

The draft also gives a clearer definition of subsidiary positions as "non-main posts that provide supportive services to main posts".

The draft would also require employment agencies to have at least 2 million yuan ($320,000) in registered capital, up from 1 million yuan now.

Outsourced workers have labor contracts with employment agencies. Agencies pay the workers' wages, provide outsourcing services to employers and charge employers commission and management fees.

State-owned enterprises and government-affiliated public institutions employ the greatest number of outsourced workers, according to the trade union report.

Wan Xi, a human resources officer with a State-owned construction design company in Chongqing, said out of nearly 500 employees in her company, about 30 percent are outsourced.

"A regular worker in an administrative position earns around 6,000 yuan a month, but an outsourced worker doing the same job only earns 2,000 yuan because they do not get a bonus," she said.

Lu Qi, 25, has been employed by an employment agency since 2009 and works at the Beijing branch of State-owned China Telecom.

"Of the workers hired by the company in 2009, more than half were outsourced," he said. "Although we outsourced employees have a chance of promotion, our wages are lower than regular workers doing the same jobs."

State-owned China National Petroleum Corporation recently announced it plans to outsource half of its 19,000 gas stations nationwide to local contractors to lower costs. 

Contractors would be granted employment and wage distribution rights, said the company.

Jiang Ying, a labor law professor at the China Institute of Industrial Relations, said China National Petroleum might be turning to contracting mechanisms because laws and regulations governing labor outsourcing are being tightened.

Jiang said the oil and gas supplier has been using labor outsourcing in almost all of its gas stations. Requiring contractors to employ outsourced workers would help change the workers' employment relationship and sustain employment. Then contractors would replace agencies as employers, she said.