After a meeting of China's National People's Congress (NPC) on March 11, 2008, the Chinese government announced plans to create five new "super ministries. This move is part of a larger government strategy of institutional restructuring aimed at improving the efficiency of its administrative system.


Included among China's new "super ministries will be the Ministry of Human Resources and Social Security. This will be an integration of two existing groups, the Ministry of Personnel and the Ministry of Labor and Social Security. The new ministry will also manage the Administration of Foreign Experts Affairs.


Analysts predict that with the institutional restructuring in China will come increased enforcement of labor regulations, particularly of the newly enacted Labor Contract Law. In March 2008, the first major example of enforcement of the new labor contract law occurred, when the Beijing Labor and Social Security Bureau began an investigation of Kraft Foods for possible violation.


Kraft Foods has been in China since 1984, but officially established its China headquarters in Beijing in 2006. After acquiring the biscuit and snacks division of the French company Danone late last year, Kraft announced in January 2008 that it would relocate its China headquarters to Shanghai in order to better integrate the two companies.


Labor union officials estimate that as many as 340 employees at the current Beijing headquarters will lose their jobs. Kraft has been accused by the labor union of violating the 2008 Labor Contract Law, which requires companies to consult with staff before making major decisions that will negatively impact employees (Article 4, Paragraph 2).


Kraft has been in the process of negotiation with the Labor Bureau and unions since early March and the nature of disciplinary action, if any, is not yet clear. The company did offer last week, however, to provide jobs for 125 of the displaced Beijing employees in Shanghai and provide severance pay above the legally required levels to the remaining employees affected by the move.


The development of this story has sparked concern among other multinational companies in China that the institutional restructuring of government bodies and increased strength of labor unions will lead to stricter enforcement of labor regulations. Despite government efforts at standardization, enforcement is likely to vary widely between regions and industries.