A top labor official has defended the new Labor Contract Law against claims it would will weaken enterprise vitality and raise the cost of law-abiding employers.

Sun Baoshu, vice-minister of labor and social security, said the law had met resistance from reluctant employers as a result of them misinterpreting it.

"I think these concerns are a result of incomplete or inaccurate interpretation," Sun told a news conference at the annual session of National People's Congress yesterday.

The law, which took effect on Jan 1, requires firms to award open-ended contracts to staff of 10 years or more, or those who have completed two fixed-term contracts, to protect them from dismissal without cause.

It also mandates higher company contributions to pension and insurance funds after many companies previously derived economic gains from violation of labor rights.

Some companies complain that such regulations will reduce labor flow, weaken enterprise vitality and increase labor costs, while others even suggest revising terms of the law.

According to Sun, compared with the previous Labor Law, the new labor contract law has actually loosened terms set for contract dismissal. "Therefore, the open-term contract is by no means an iron rice bowl. It will not lead to rigidity in the labor market," Sun said.

He was referring to the former cradle-to-grave system of employment - the norm for urban workers under China's planned economy - while alluding to an iron rice bowl.