Is The New Labor Law Implementing The Merger Tide Of Shoe Enterprises?

The shoe industry seems to face new challenges every year.

The labor contract law, which was implemented in 2008, undoubtedly implies a challenge, and the challenge is that the shoe industry is a typical labor-intensive industry, relying on the traditional way of existence developed by low labor costs.

According to the survey of the footwear association of Asia, about 500 shoe making enterprises in Guangdong province have failed in the past 3 months, and some weaker shoe companies have chosen to go out of business before the end of December.

For the shoe-making industry with an average net profit level of only 5% to 8%, the implementation of the labor contract law and the combination of "two taxes and one tax" increase the cost to enterprises by more than 20%.

For the textile and garment industry with an average profit margin of only 5%, is the same predicament in front of us?

According to industry sources, in December last year, some garment enterprises in Guangdong had been bankrupt due to their small profits. The implementation of the labor contract law will become the last straw to crush the camels.

Does the enterprise have affordability if costs increase?

Chang Kai, the group leader of the labor contract law (Draft), and professor of Renmin University of China, said in an interview with the media that the cost increase of the enterprises after the implementation of the labor contract law is limited, which is not unbearable for our enterprises at present.

But compared to the cost of law enforcement, the cost of breaking the law is obviously higher.

A careful study of the labor contract law is not difficult to see. For the enterprises with normative employment system, the increase in labor cost is mainly reflected in the termination of the fixed term contract after the implementation of the labor contract law.

For the enterprises with irregular employment system, the labor cost will be greatly increased after the implementation of the labor contract law.

For example, if an enterprise breaks the law or terminates the labor contract, it will pay two times to the worker according to the standard of the economic compensation.

If the employer fails to pay the worker's remuneration in full or in accordance with the stipulations of the labor contract or the local minimum wage standard or pay overtime wages, the labor administrative department will be ordered to pay within a prescribed time limit. If the employer fails to pay the overdue payment, the employer should pay the worker more than fifty percent of the amount payable under the standard of one hundred percent or less.

In addition, the labor contract law takes the social insurance clause as the essential clause of the labor contract, which is undoubtedly a huge expenditure for the enterprises who did not pay social insurance premiums for their employees before.

The reality is that domestic textile enterprises above scale often have a more perfect and standardized employment system, and the continuous development of high-tech products has made the profit margins of these enterprises generally higher than the average level of the industry. Therefore, the implementation of the labor contract law has little impact on these enterprises.

In terms of employment, non standardized enterprises are often those small and medium-sized private enterprises with low cost and low profits.

Bao Yujun, President of the China Private Economy Research Association, said that in the private enterprises, there was indeed a situation of irregular employment system. According to the survey, 40% of the private enterprises in China did not sign labor contracts with the enterprises, and the employees were in a state of insecurity.

After the implementation of the labor contract law, it is precisely those small and medium-sized private enterprises whose profit margins are small.

Wang Yiming, director of the personnel management research center of the China Talent Research Association, said that for many domestic enterprises, low cost has always been the only competitive advantage.

Without other advantages, enterprises will not have great development in the future.

Professor Chang Kai also asserted: "some illegal businesses and illegal employment enterprises will pay a lot of costs, and even bankruptcy.

But on the other hand, law-abiding enterprises will be more competitive. "

In this regard, the Wuhan Textile Association official admitted that after the implementation of the "labor contract law", the biggest impact is indeed small and medium-sized private enterprises, individual enterprises.

But he believes that SMEs are not unable to bear such pressure.

"Big enterprises can pform and innovate on a large scale, and small businesses have their own small scale adjustment and pformation methods.

In the past, a large number of low value-added products could not be sold out, and large enterprises could not earn enough money.

It is better to make the product less refined and raise the price of the product.

In this sense, the implementation of the labor contract law enables enterprises to re-examine themselves and benefit the long-term development of small businesses.

Facts have proved that textile enterprises, which are already in a highly competitive market environment, often have more flexibility and larger development space than outside imagination.

The implementation of the labor contract law will inevitably become a dividing line between the strong and the weak, the innovator and the conservative, and the small and medium-sized private enterprises which are unable to bear the heavy cost increase. If they can not be pformed in time, they will not be able to go further.

Survival of the fittest, is the tide of merger coming?

Although China is still a capital market, labor supply exceeds demand, but "recruitment difficulty" is still a major problem facing the textile industry every year.

Statistics show that migrant workers occupy a large proportion in textile enterprises all over the country.

For example, over 4000 textile and footwear enterprises in Changzhou, Jiangsu, the number of migrant workers exceeds 500 thousand, accounting for nearly 1 million 600 thousand of the total number of 1 million 600 thousand migrant workers in the region.

In the labor intensive enterprises such as textiles and garments in Foshan, Guangdong, the proportion of migrant workers in the number of employees is more than 80%.

Research shows that migrant workers are more and more active in their work migration.

In recent years, the gap between migrant workers in the Pearl River Delta region has increased significantly, while migrant workers in Shanghai and Hangzhou delta regions are gradually increasing.

Before the implementation of the labor contract law, some enterprises are unwilling to sign long-term contracts with workers in order to avoid legal obligations.

In most labor contracts within 1 years, the short term tendency of labor contracts obviously affects the harmony and stability of labor relations, to a certain extent, affects the sense of employment stability and the sense of belonging to employees.

After the implementation of the labor contract law, it will accelerate the flow of migrant workers to enterprises that can provide long-term stable employment environment. At the same time, the employment gap will be further increased with the use of labor system, and the survival of the fittest will be accelerated.

In addition, the implementation of the labor contract law will also push some enterprises that rely on labor cost advantages to take the road of pformation.

Professor Chang Kai pointed out that, at the beginning of the implementation of the labor contract law, enterprises may be a little out of tune, but after a period of adjustment, the law can promote the pformation of enterprises, from the competition of low labor costs to the competition of innovation ability, and labor and capital work together to innovate.

In the process, some uncompetitive enterprises will be eliminated, while others will go to new life.

Private entrepreneurs once believed that the impact of the labor contract law on the cost of labor would lead to an annexation of enterprises, and that powerful enterprises could merge with others and enterprises without strength could only live on their own.

This is rather pessimistic.

However, with the implementation of the labor contract law, a more harmonious people-oriented labor relations are being gradually established.

"Production relations affect productivity". In this process, the traditional survival rule of the textile industry will be subverted. A competition law representing more advanced productive forces will become the core of the future development of enterprises.

Facing the capital market, enterprises with the capital management consciousness and mind will be guided by the idea of value management, and finally go to the development path of enterprise capital annexation.

And the survival of the fittest caused by the implementation of the labor contract law will provide all these possibilities.