They cited the case of an enterprise in Tangxia township which employed 40,000 workers, all of whom came from labour supply companies, which in theory are only supposed to provide short-term and supplementary labour.
The vice-chair of the Guangdong Provincial People’s Political Consultative Conference, Qin Weidong, said, “There are some enterprises that need long-term labour but want short-term workers because they can pay them less and cut costs,” Southern News reported.
Speaking at the same Dongguan conference on 26 July, Vice-Mayor Li Xiaomei admitted that the labour supply system was a major headache for the local government but claimed officials could not effectively manage it because it fell outside the compass of the law.
The use of workers from labour supply companies by manufacturers and service sector employers grew significantly after the implementation of the Labour Contract Law in 2008. Employers believed they could use the labour supply system to avoid having to sign an employment contract with their workers.
The Labour Contract Law states that supply workers are employed by the supply company but should receive the same pay and working conditions as those formally employed by the enterprise they are assigned to. However, the provisions in the law designed to protect supply workers are widely ignored and rarely enforced by government agencies.
The problems caused by abuses of the labour supply system come on top of several high-profile bankruptcies in Dongguan, including one of city’s oldest toy manufacturers, Soyea Toys, which went bankrupt in early July, leaving its 470 employees with six weeks’ salary in arrears. This, together with the closure of a major textile manufacturer in June and the closure of several other smaller enterprises, has led to fears of a “wave of closures” in Dongguan.