China CSR Watch

By China CSR Watch (www.csrcsr.com)

Since early 2007, 11% of LG Electronics China employees were forced to leave the company after their employment contracts ended without renewal. This is the biggest work force reduction since LG Electronics entered China market 14 years ago. LG has more than 38,000 employees in China according to its official website.

“I don’t regard this as a lay-off. It’s an adjustment of human recourses due to the strategic change of the company,” explained HAN Xuefei, public relations manager of LG. No severance package was awarded due to the fact that the employees’ labor contracts have expired, according to the LG Electronics’ statement.

According to LG China’s HR practice, the labor contract is to be renewed on a yearly basis. However, according to the latest Chinese labor law expected to come out within the year, employees who work for a company for more than 10 years have the right to request a un-fixed term labor contract.

“After the introduction of the new labor law, the company can only lay off those un-fixed term employees with a hefty severance package,” according to an anonymous source who claimed to have worked in LG’s HR department.

Many forced-out employees are said to have worked for LG between 5 to 10 years.

Sources (in Chinese):
Guangzhou Daily: http://tech.qq.com/a/20070628/000117.htm
Yangcheng Evening News: http://news.sohu.com/20070626/n250780039.shtml
World Business Report: http://biz.icxo.com/htmlnews/2007/06/25/1148074.htm
LG Electronics: http://cn.lge.com/aboutus/china/management.jsp