China Wahaha says labour law hurts competitiveness

By Kirby Chien

BEIJING, March 9 (Reuters) - Hangzhou Wahaha Group, China's top beverage firm, said on Sunday a new labour contract law was a step backward to a time of the "iron rice bowl" and changes were needed to help companies stay competitive.

The comments contrasted with those of government officials who said the law does not raise costs significantly and that it was too early to consider revisions as it has only been in effect since the beginning of the year.

"The law is overly protective of workers' rights," Zong Qinghou, Wahaha Group chairman, told reporters on the sidelines of China's annual National People's Congress, or parliament.

Zong is a delegate to the Congress.

"Of course it is a step backward to a time of the iron rice bowl," he said referring to the system of lifetime employment common for urban workers under China's planned economy.

"It isn't reasonable," he said. "We must protect workers, but uncompetitive businesses would hurt workers even more."

The law requires firms to give open-ended contracts to staff who have worked for 10 years or completed two fixed-term contracts and mandates higher company contributions to pension and insurance funds.

It also makes it harder to fire workers, a point that Zong said could hurt competitiveness and lead to more companies going out of business.