Firms in Shandong and Hubei provinces that want to lay off 40 or more workers have been told they must first apply for approval from their local human resources and social security authorities, Legal Daily reported on Sunday.

Workers check spectacles on Friday at the Sunhing Glasses Co Ltd in Dongguan, Guangdong province. Authorities in the city recently established two 1-billion-yuan funds to help small and medium enterprises weather the current financial crisis.[Xinhua]

The order, released last Tuesday, is an amendment to the national labor contract law, which came into force in January and states that all companies that want to lay off more than 20 employees must first get approval from their labor unions and report their layoff scheme to the labor authorities.

Provincial authorities have now 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, Wang Kexing, head of the unemployment and social insurance section of the Shandong human resources and social security department, told China Daily Monday.

He said he had never received any applications from firms seeking to lay off large numbers of people.

Despite Shandong being one of China's major export regions, the number of people without jobs in the province rose by more than 680,000 in the first nine months of the year, according to official figures.

If the rule is implemented, the situation will get even worse, a Shandong company boss said Monday.

"It doesn't sound good, and will probably make my business more difficult," Li, general manager of Qingdao Jintian Textile Co Ltd, told China Daily.

The firm has four factories in Qingdao and employs more than 1,000 workers.

"The factories aren't getting enough orders, so some workers have nothing to do," Li said.

"I have been thinking of getting rid of some of them to cut costs. But if the government doesn't agree to my layoff plan, what can I do? I can't afford to pay them all."

Meanwhile, on Friday, the Hubei provincial human resource and social security department said that firms must report to local governments 30 days in advance if they want to lay off 50 or more employees, or 10 percent of their total workforce, Changjiang Business Daily reported.

Zhou Layuan, an official with the department, was quoted by the newspaper as saying that State-owned companies in finance, oil, power, and telecommunications have been advised to cut salaries, rather than jobs.

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

(China Daily?November 18, 2008)