Xin said the reason for the rising unemployment in the country was the crisis, not the law, adding that many export-oriented firms had shut down due to extreme losses triggered by the weakening economy.

Xin said: "There will not be a substantial cost increase for companies that have strictly followed the Labor Law passed in 1994.

"All the principles in the Labor Contract Law have actually been included in the Labor Law. The new law just details the provisions to facilitate implementation."

Xin said the new law has "played a positive role in maintaining stable labor relations" amid the economic downturn and has helped improve workers' social welfare.

"Our labor relations basically remain stable and in order, which shows the law has stood the tests of reality and time," she said.

In September and October last year, the NPC Standing Committee sent inspectors to six provinces to check if the labor law was being implemented.

The investigations revealed that as of September, about 93 percent of the employees in companies with a turnover of more than 5 million yuan (US$732,000) had signed labor contracts, up 2.3 percent year-on-year.

In the first half of the year, enterprises also signed 1.09 million collective labor contracts with trade unions, covering 143 million workers, both up 12 percent over the same period last year, according to the report.

(China Daily March 10, 2009)