Union effects on performance and employment relations: Evidence from China

Abstract

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.

How do industrial relations climate and union instrumentality enhance employee performance? The mediating effects of perceived job security and trust in management

“…First, we make an empirical contribution by answering the calls of researchers for an examination of whether employee perceptions of the industrial relations climate and union effectiveness influence performance at work (Deery & Iverson, ). In doing so, the findings help to explain prior empirical work, which established a positive association between the presence of enterprise unions and employee productivity (Lu et al, ; Yao & Zhong, ). Our findings suggest when employees in private‐sector enterprises in China see unions as effective in developing relationships with management and advocating employees' interests, this will lead to improved performance due to increased perceived job security and trust in management.…”

“…Although some commentators have questioned the effectiveness of the ACFTU in representing workers' rights, given it is indirectly controlled by the Communist Party, and is therefore a vehicle for addressing state interests (Taylor & Lee, ), others have argued the ACFTU has been effective in improving workers' rights (Chan, Snape, Luo, & Zhai, ), especially in the private sector, which now accounts for the majority of unionized employees. In line with such arguments, there is growing evidence that the presence of enterprise‐based unions has a positive influence on employees' wages, benefits, and productivity (Lu et al, ; Yao & Zhong, ). Improvements in both direct and indirect compensation of employees are hardly surprising in view of the demonstrable and longstanding pro‐worker bias within the CCP.…”

“…First, we make an important empirical contribution by answering the calls of researchers to investigate how unions influence employees' work performance (Deery & Iverson, ). In doing this, we endeavor to explain the findings of prior empirical work on China, which established a positive association between the presence of enterprise unions and employee productivity (Lu, Tao, & Wang, ; Yao & Zhong, ). Second, we make an important theoretical contribution by examining the psychological mechanisms that explain how employee perceptions of the industrial relations climate and union instrumentality influence their job performance.…”

Labour Unions and Firm Productivity: Evidence from China

“…Using various cross‐sectional datasets, Ge (), Lu et al . () and Yao and Zhong () have suggested that unions are positively related to a wide range of worker benefits such as fair wages and working hours, insurance and pensions. However, from a firm's viewpoint, improving employee benefits increases labour costs, which might erode a firm's productivity and profitability.…”

Flexible institutional arrangements and labour productivity: the case of transit industry in the United States

“…The unions strive to achieve certain job security, and this may be a good long‐term strategy to attain increases in productivity (Miller, ). Lu et al () find positive effects of unions on labour productivity in China, but not on profitability.…”