Of course, you can also call them rats for absconding with their companies’ loot while leaving their workforce with no money to survive on. China’s recent Labor Contract Law supposedly protects workers from unannounced factory closings and loss of pay, but many owners have been doing an end run and disappearing.

To date, some 20 million migrant workers, who relocate from the provinces to work in factory-rich Guangdong Province and send money home to their families, are now unemployed.

Since all workers are unionized in China (but have no right to strike), the national union is fighting back, and so is the government.

“We will use all labor-related laws to help migrant workers keep their jobs in this difficult time,” Zhang Mingqi, vice-chairman of the All-China Federation of Trade Unions said at the start of the National People’s Congress (NPC) session.

Some owners were also hopeful that the government would not enforce the Labor Contract Law and other provisions, but that’s not going to happen, evidently.

Xin Chunying, the deputy director of the legislative affairs commission of the NPC Standing Committee, said the Labor Contract Law will not be amended because of the current global economic downturn.

“The crisis has nothing to do with the law. We won’t amend the law because of the downturn,” she told a press conference of the ongoing NPC session Monday.

Anyway, all this looks eerily like what will happen in the United States if the Employee Free Choice Act (EFCA–see yesterday’s posting) passes. In a word, chaos. In two words, disappearing companies.

When Ford revolutionized industry with his two implementations, he not only doubled the average worker’s take-home pay, but he also launched the creation of the middle class.

Now, his innovations have come to China, partially anyway. There is no death of assembly lines and other boredom-inducing work conditions in the People’s Republic, but there is also no $5-a-day pay standard either.

Now, at least one labor consultant in China is urging that the nation adopt a minimum daily wage of $5 to spur consumerism in the face of economic hard times. Call it “trickle up,” as the article reporting it did.

All is not well in the PRC. Some 18,000 (some say 60,000) factories have closed since the start of 2008, and at least 10 million (some say 50 million) migrant workers are now out of work and threatening social instability. Officials are worried.

Actually, officials are more than worried–they scared s’less and wreaking havoc on those who would try to organize workers to protest for their rights.

Take the case of migrant worker legal advocate Xiao Qingshan.

On January 9, Xiao said, 14 security officers from the local labor bureau broke into his office, confiscated 600 legal case files, 160 law books, his computer, his photocopier, his television set and 100,000 yuan in cash.

“That evening I was ambushed near the office by five strangers who forced a black bag over my head and then threw me into a shallow polluted canal,” he said. His landlord has since given him notice to quit his rented home.

And meanwhile, all U.S. Treasury Secretary Timothy Geithner worries about is the exchange rate of the yuan.

Years of sweatshop wages and income equality are coming home to threaten China’s stability–and its leaders. Protests have swept the nation even as Premier Wen Jiabao gets a shoe, Bush style, hurled at him in London.

The prestigious Far Eastern Economic Review headlined its latest edition, “The coming crack-up of the China Model.”

And you thought we had it rough here.

What this dictates is that a company has to go through almost-impossible-to-conquer hoops to lay off or fire workers before their contracts are up. Even if the company plans to reorganize and/or eliminate a factory or division, it still has to agree to rehire the affected employees, or if that proves impossible, to give them 30 days’ notice and ample severance pay.

Of course, if the company just shuts down and the owners disappear, these policies can’t be enforced very easily, and that appears to be the route that many toy manufacturers have taken this year as demand for their products dried up in the West.

So, these days employees in China have the upper hand when it comes to job security, which is a sharp break from just a year ago before the LCL (Labor Contract Law) was passed. (However, if you read the story linked below about “shedding workers,” you’ll find an interesting quote from a Chinese official who tells an employer that, so long as he doesn’t lay anyone off, the official will overlook other labor law violations.)

On the organized labor front, things might favor the employers a bit more. While most employees are organized into unions, it is illegal for them to strike, but work slowdowns and stoppages have proven to be ready substitutes.

Overall, however, I wouldn’t be surprised if the LCL hasn’t actually contributed to some–or many–of the factory closings, as owners found it easier just to cease operations than navigate the shoals of the LCL and reduce their workforces to stay in business.

For more information, read “The Impact of China’s Labor Contract Law” and “Employers in China Have Issues Shedding Workers.”

So, if you’ve been eying China for a low-cost start-up, be forewarned that the country is not the cheap source of labor that it’s been perceived to be.

(China is also moving, Obama-like, toward a national health care and “social insurance” system, which is recounted here.)