Staffing companies in Shanghai have grave concerns about new laws regulating the staffing market and say that the risks threaten the viability of the nascent industry.

The new laws came about as disputes between staffing agencies and temporary employees increased exponentially in recent years, triggering reaction from authorities. In China, like in France and other countries, a temporary worker signs a contract with the staffing agency and does the work for the staffing client. The Chinese authorities claim that frequently when conflicts arise neither the client nor the staffing agency properly addresses the concerns of workers. Occasionally, the staffing agency disappears overnight leaving the already marginalized temporary worker without recourse.

Article 12 of the new labor law requires staffing businesses to maintain current assets of  ¥500000 (about $70,000) and to deposit with the government a refundable ¥5000 (about $700) per temporary worker. Article 40 says that after one year on an assignment, a temporary worker must transition to a direct contractual relationship with the end client.

The laws purport to better regulate agencies and avoid the problems of fly-by-night closures, thus protecting the rights of the temporary worker.  Industry executives point out however that the capital requirements are excessive and make it difficult or impossible for many companies to stay in business.

Despite the new laws, many bigger staffing companies maintain an optimistic view of the Chinese market. They point to a burgeoning market which in Shanghai has increased more than 35% annually for the last five years, much higher than in developed economies. Manpower China now has 62 offices in twelve big cities; last year it had only four offices in three cities.

[source: Chinese staffing friend]

Tags: Industry