27 percent of foreign firms seen laying off China staff

By Kirby Chien

BEIJING (Reuters) - Official media said on Friday that 27 percent of multinational firms in China had already started laying off employees, citing a survey by a state-controlled employment firm.

The official China Daily newspaper cited a FESCO survey that had polled 356 of its clients across the country that included a wide range of industries.

The report did not say how many jobs could be lost, but the trend poses tricky legal and political problems for foreign companies as Beijing has asked firms not to dismiss workers due to the global economic turmoil.

China fears social unrest as 20 million migrant workers have already lost their jobs, and one in five firms in China's once vibrant export hub in Guangdong may soon lay off workers.

"China has never experienced a mass layoff scenario of the type it is experiencing now," said Susan Munro, a labour expert at law firm O'Melveny & Meyers based in Shanghai.

"We have had steady calls from clients about this over the past six months," she said.

China's labour law provides a procedure for a mass layoff -- defined as 20 employees or 10 percent of the staff -- but the provisions are filled with vague terms that leave much to the discretion of the government.

Intel said earlier this month that it was closing its microchip testing plant in Shanghai, eliminating 2,000 jobs while offering affected workers positions at other facilities in other parts of the country.