Legislators are drafting regulations on the implementation of the new Labor Contract Law to eradicate any confusion or controversy associated with it, Li Yining, a senior economist and political advisor, said on Monday.

"The purpose of the law is to create a win-win situation for both employees and employers," Li said on the sidelines of the ongoing CPPCC session.

"The regulations should help solve the problems found in the initial execution phase."

Since coming into effect on January 1, the labor contract law has sparked controversy and complaints from a number of employers. The law, designed to better protect workers' interests, requires employers to pay for overtime, provide insurance for employees and sign open-ended contracts with workers who have been with the company for more than 10 years.

Some analysts have argued the strict provisions will increase labor costs and reduce flexibility, while others have said the higher business costs could force some labor-intensive firms to move out of the country.

Zhang Yin, president of Hong Kong-listed Nine Dragons Paper Holdings and political advisor, said in her proposal to the CPPCC that the government should exempt labor-intensive companies from signing permanent contracts with employees who have worked for more than 10 years.

She also said the law has added substantially to firms' costs and risk.

"The level of communication between the legislators and related groups is insufficient and that has led to misunderstandings about the law," Li said.

"This is a major reason for the current regulations on implementation."

Li said legislators will discuss the details of the labor law with CPPCC members, several of whom are owners of labor-intensive businesses.

"This communication will help solve the problems concerning the law," he said.

(China Daily March 11, 2008)