Enterprise threatens to take its business elsewhere after losing labour rights lawsuit in Shenzhen

One of Shenzhen’s largest manufacturers has threatened not to hire any new workers in the city after a court ordered it to pay 800,000 yuan in compensation for nonpayment of statutory overtime and social insurance contributions for more than one hundred workers.

Markwins International, an American enterprise that produces cosmetics and beauty products for Calvin Klein, and is a major supplier to Walmart, is currently one of the biggest tax payers in Shenzhen’s Longgang district.

Since the lawsuit however the company said it had lost confidence in Shenzhen’s business environment and would rather contract out its orders than hire new workers in the city, according Ms Han, the CEO of the company’s Greater China division.

She blamed legal professionals in Shenzhen for stirring up the workforce and encouraging workers to sue their employers when enterprises were fighting for their survival during the financial crisis. “Compared with workers in inland regions, workers in Shenzhen are younger and are more likely to cause trouble,” she said.

However, lawyers in the case said the workers were simply standing up for their rights and, in fact, the court did not even give the plaintiffs all they were legally entitled to.

Worryingly, rather than uphold the law, the Shenzhen government is reportedly now negotiating with Markwins to change its mind and hire workers in the city again. Earlier in 2009, the Guangdong procuratorate issued a decision to go easy on enterprises to help them to go through the financial crisis. And according to a legal expert and commentator in Shenzhen, Jin Yan, since the international financial crisis, the courts have become more lenient towards enterprises, required workers to produce more evidence and awarded less in compensation.

Moreover, as the number of labour disputes continues to increase, the government has implemented a number of policies to keep lawyers or paralegals under control. So called “black lawyers” or “black middlemen” (黑中介) have been blamed by the authorities for causing social instability and have been closely monitored and often harassed. A more recent policy issued by the Dongguan municipal government limited citizen agents (公民代理人), self-trained labour rights advocates who help workers who cannot afford professional legal services file labour dispute cases at arbitration hearings and courts, to just two cases a year.

At present, China still lacks sufficient lawyers specializing in labour disputes, and clamping down on the activities of those few practicing labour lawyers and citizen agents will certainly not help workers protect their legal rights.
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