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Layoffs ban unreasonable

(China Daily)
Updated: 2009-01-12 07:56

The government should focus on creating a favorable business environment to help mitigate the effects of recession on the public rather than forbid businesses to lay off workers, says a Changjiang Daily story. The following is an excerpt:

The Shanghai Minhang district federation of trade unions recently urged more than 200 local businesses, mostly technology and manufacturing-oriented, to promise not to lay off employees during hard times as a way of fulfilling corporate social responsibility.

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The move is designed to help local businesses cope with the global economic turmoil and maintain social and economic stability, according to the district federation of trade unions.

The tough economic situation is forcing many companies to reduce expenses. One of the most conventional ways is to cut jobs in step with falling production. Many companies, including some renowned transnational corporations, have announced job-cut plans since the outbreak of the credit crunch.

Even large companies have to let employees go, and for some medium-and-small sized companies it is a matter of survival. Business strategy must adjust when the economy fluctuates.

There is no reason for any federation to ask companies not to lay off employees and place the task of securing social stability on companies in Shanghai Minhang district. Such a requirement goes against market rules and will hinder businesses' ability to survive and recover from the economic downturn.

The government should release a string of stimulus policies to save companies from sliding into further recession.

The State Council recently said more efforts would be made to encourage businesses to upgrade technology and engage in innovation. It also said there will be policies to promote mergers and acquisitions among companies. At the same time banks will be encouraged to increase credit supply to help small and medium businesses.