Nov. 18 – Companies based in Shandong and Hubei provinces are now required to apply for approval from their local human resources and social security authorities before a layoff of 40 or more workers.

The regulation amends on the national labor contract law implemented last January. According to the national labor contract law, companies that want to lay off more than 20 employees must first apply for approval from labor unions and report their plan to labor authorities.

Wang Kexing, head of the unemployment and social insurance section of the Shandong human resources and social security department, told China Daily that provincial authorities have decided to launch the order in response to the global financial crisis, and in the wake of several cases of company bosses from Shandong, Guangdong and Zhejiang, fleeing their responsibilities and leaving workers stranded.

Last October, the government of Dongguan in Guangdong Province paid for the salaries of more than 7,000 workers amounting to RMB24 million after its company owner fled.

China’s Ministry of Human Resources and Social Security has advised local government to ensure stable employment levels and monitoring labor-intensive factories that are susceptible to layoffs.

Liu Junsheng from the labor-wage institute of the Ministry of Human Resources and Social Security told China Daily: “These measures can help protect social stability, which is now more important than economic development.”

For the first nine months of the year, more than 680,000 people were unemployed in Shandong despite the province being one of the country’s exports hubs.

The Hubei provincial human resource and social security department said that companies must inform local governments 30 days prior to laying off 50 or more employees, or 10 percent of their total workforce, reports China Daily.

China’s state-owned companies have been instructed to reduce salaries, rather than layoff workers.