The country's top telecoms equipment-maker Huawei Technologies said yesterday that the mass resignation last month by more than 7,000 of its employees was simply part of a program to boost its competitiveness.

The privately owned company is one of the first in China to give its staff stock options. However, it said it now needed to revise employment contracts to increase its efficiency, which had been damaged by both the stock option plan and its unique "job number" scheme.

Under the latter, workers who joined the Shenzhen-based company between its establishment in 1988 and 1999 were paid higher salaries and given a better benefits package.

However, in a statement issued to China Daily, Huawei said the stock option and job number schemes, which had initially helped boost morale in the firm's early days, had in more recent times caused resentment among those not covered by them.

As a result, more than 7,000 employees who had been with the company for the past eight years or more, last month agreed to resign their original contracts in return for compensation payments and the chance to reapply for their old jobs, the statement said.

The move, however, led to speculation Huawei was actually attempting to exploit a legal loophole ahead of the introduction of the Labor Contract Law on January 1.

Under the new legislation, employees who have worked for a company for more than 10 consecutive years are entitled to sign open-ended labor contracts, rather than the more commonly used fixed-term agreements.

Huawei denied it was trying to dodge the law saying all workers had agreed to resign and reapply.

"We have had problems with the crossover of employees within the parent company, subsidiaries and joint ventures, as well as with unclear job descriptions, and that is not good for our business operations" the statement said, adding that the job number scheme also had to be revised.

The move is part of a series of staff-related reforms, which covers everything from salaries to welfare and insurance benefits, the statement said.

The move comes at a time when the global telecoms industry is on a downturn.

And as Chinese authorities continue to delay the awarding of licenses to operators to build the next generation mobile-phone networks, almost all equipment-makers, including foreign players, have been hit by a slump in business.

Lin Jingqing, an official with the Guangdong department of labor and social security, said national authorities will soon issue supporting regulations to the Labor Contract Law.

(China Daily November 6, 2007)