Outsource of labor tightened in China

China's recruitment agencies that help laborers work overseas will have to set up a security fund of at least three million yuan ($473,000) for possible evacuation and compensation during emergencies or if contracts fail, according to a new regulation.

A regulation meant to standardize overseas labor outsourcing, published on Monday, requires recruitment agencies to set up a separate bank account with at least three million yuan to evacuate employees during emergencies or to compensate workers when the agencies fail to carry out their obligations.

Increasing need of laborers overseas has helped promote employment, but has witnessed some illegal labor outsourcing, a statement released by the State Council's Legislative Affairs Office and the Ministry of Commerce said. It said the illegal practice has jeopardized the rights of workers and possibly led to mass incidents.

The regulation, designed to clean up the business of outsourcing laborers, also requires recruitment companies to have at least six million yuan in registered capital, a threshold much higher than the standard for other companies and one that may prevent half of current businesses from being authorized to operate, analysts said.

"Not only companies go out for business, workers also do, so it is necessary to protect their rights from being infringed upon," said Yin Guangjun, vice-president of the Cangzhou subcouncil of the China Council for Promotion of International Trade.

Yin said labor outsourcing could help promote domestic employment rate, especially in rural areas where a large quantity of surplus labor exists.

By the end of March, China had about 809,000 workers overseas, according to the Ministry of Commerce. That is 40,000 more people than last year.

"Electric welders, construction workers and lathe workers are among the most needed," he said, adding that labor outsourcing can help improve the living standards of workers, as three years of overseas work can bring in as much as 200,000 yuan.

But on the other hand, he noted, illegal agents and unqualified businesses have threatened worker's rights and the development of the industry.

"It is necessary to set a threshold for the registered capital assets, for the government has to consider whether the company will be capable of helping workers during emergencies," he said.

In a previous case, China said it has spent at least 1 billion yuan, or 28,000 yuan per evacuee, on the mass evacuation of its citizens from Libya in March 2011. The evacuation helped about 35,860 Chinese nationals return home safely, but the expense did not include the cost incurred by follow-up operations, said Zhao Hongyu, an official of the emergency management office under the State Council.

Yin said he believes the regulation, which will take effect in August, will help regulate the market by requiring an emergency deposit as well as other measures to protect the rights of outsourced workers.