Union Effects on Performance and Employment Relations: Evidence from China

Abstract

This paper empirically studies union effects on the performance of, and employment relations in, China's private enterprises. The study finds a positive and statistically significant union effect on labor productivity, but not on profitability. It further finds that unions lead to better employee benefits and increased contract signing in employment. These findings suggest that, in the era of transition from a centrally planned to a market economy, unions in China's private enterprises do promote workers' interests as unions do in other economies. And they do that without abandoning their traditional role of harmonizing employment relations, as required by the Party.

Determinants of Social Insurance Coverage in the Philippines

“…Rickne [22] studied the relationship between labor market conditions and social insurance participation among Chinese industrial firms and found that the increased scarcity of labor, large shares of uninsured workers, large shares of low-educated workers and those without labor unions were quantitatively important drivers of participation. The results of his tests were supported by the findings of the studies by different authors, namely: Cai [23], Meng [24], and Blechova et al [25] impact of aging population and rural-urban migration; Lu, Tao and Wang [26] unionization; Nyland et al [27]; Nielsen and Smith [28] negative association of firm size; Mao et al [29] positive association of firm size; Nyland et al [30], Cheng et al [31], Guo and Gao [32], Smyth et al [33] education impact; Nielsen et al [34], Smyth et al [33] urban residence permit; Gao et al [35] labor contract status.…”

Labor market conditions and social insurance in China

“…Relating the estimated effect to the trends of increased tightness over the period, almost half of the increase in participation can be accounted for by this factor. Notably, these results should, however, not be interpreted as an equally important impact on the share of workers covered because of segmentation in coverage within the firm (Nyland et al, 2011;Lu et al, 2010). Non-zero payments nevertheless represent an important first step of participation, and the statistical relationship between this first step and labor scarcity is highly robust to, among other things, including firm fixed effects and restricting the sample to control for measurement error in the main dependent and independent variables.…”

“…In a similar study of 4,000 firm surveyed in 2006, Lu et al (2010) also find a positive correlation between the share of workers with social insurance and the existence of an inhouse union (but, perhaps curiously, no correlation is found between wages and unionization).…”

“…As noted in the literature review above, some recent studies have pointed to the role of unionization as a driver of social insurance provision of industrial firms (Yao and Zhong, 2010;Lu et al, 2010). The authors interpret their results as the existence of an, albeit weak, bargaining role for unions in the firm's social insurance decision.…”

“…3 Nyland et al (2011) report evidence from an interview study of six firms, finding cost containment to be the major motive for evasion, and recruitment of skilled labor to be a major driver of participation. Yao and Zhong (2010) and Lu et al (2010) show that unionization of firms is conducive to improved social insurance coverage of the workforce. 4 The subject to two recent special issues (China Economic Journal, Volume 3 Issue 2 of 2010, and China Economic Review, forthcoming),the theory states that as poor countries develop, rural labor with low demands on work compensation flows to the cities.…”