Does Union Voice Matter in Chinese Workplace?

DOES UNION VOICE MATTER IN CHINESE WORKPLACE?

CHUNYUN LI

A thesis submitted to the

Graduate School-New Brunswick

Rutgers, The State University of New Jersey

In partial fulfillment of the requirements

For the degree of

Master of Science

Graduate Program in Industrial Relations and Human Resources

Written under the direction of

Mingwei Liu

And approved by

______

New Brunswick, New Jersey

October 2011

ABSTRACT OF THE THESIS

DOES UNION VOICE MATTER IN CHINESE WORKPLACE?

By CHUNYUN LI

Thesis Director

Mingwei Liu

This study examines the effectiveness of enterprise unions‟ collective voice face in influencing employment outcomes and firm performance in China where enterprise unions do not have a monopoly face. Drawing on a sample of 1268 firms in 12 Chinese cities, this paper analyzes whether union voice activities make a difference at the workplace within unionized firms and compares the effects of unions with a collective voice face and non-voice unions. The results indicate that, without the power from monopoly face, enterprise unions‟ supposed collective voice function is very limited: union voice activities do not improve wage or firm performance and what they tend to associate with are a few benefits. Unions with a collective voice face correlate with more employment outcomes than non-voice unions, though both types of unions associate significantly with a small number of outcomes. The evidence suggests that the national union‟s effort to expand collective consultation and to promote union participation in management may strengthen enterprise unions‟ representative role to a limited extent; there is still a long way to promote Chinese workers‟ collective voice in the absence of independent unions and the right to strike.

Table of Contents Introduction ...... 1 What do Chinese enterprise unions do: power sources and their two faces ...... 2 What do we know about union effects in China? ...... 8 Data and Measure ...... 10 Sample...... 10 Measure ...... 11 Findings...... 15 Union voice activities may not create wage premium ...... 16 Union voice activities associate with a few mandatory employment conditions .... 17 Union voice activities have weak relationship with voluntary benefits ...... 18 Union voice activities and firm performance ...... 19 Comparing different unions ...... 20 Robust check in subsamples ...... 22 Conclusions ...... 23 Reference ...... 25

iii

Does Union Voice Matter in Chinese Workplace?

Introduction

Most of the studies on economic effects of unions have been centered on developed economies especially the United States. In their seminal work on U.S. unionism,

Freeman and Medoff (1984) found that unions, which have a monopoly face and a collective voice face, create wage premium, increase the share of compensation going to employee benefits, reduce overall wage inequality, reduce turnover and lengthen worker tenure, improve productivity, and lower profits. Subsequent studies have largely supported these empirical results (Kaufman 2005: 583), except for a close to zero productivity effect (Hirsch 2004: 432).

Existing literature on union effects is lacking in empirical evidence from developing economies such as China and India. A close examination of Chinese unions’ effectiveness in representing workers is important to understand how unions protect workers’ interests under distinct institutional structures. The unique industrial relations system in China, where the enterprise unions are supposed to have a collective voice face while the institutional framework denies them a monopoly face, provides a suitable setting to test whether enterprise unions can serve as an effective collective voice in the absence of monopoly power.

Few quantitative studies have examined union effects in China partly due to the popular impression that Chinese workplace unions are useless or are not real. Some qualitative studies show that employer dominance and lack of power from organized labor have rendered grassroots unions impotent and incapable of safeguarding workers

(e.g. Chen 2009; Liu, 2009). However, since the early 2000s, China has witnessed an explosion in workplace institutions: by 2009, 50.2% of the workforce was organized,

35.9% covered by collective agreements, and 13.7% covered by collective wage agreements1. Today, China boasts one of the highest union densities (Lee 2009). Has the spike in industrial relations institutions improved the collective voice function of the unions, without changing the industrial relations framework to empower workplace unions?

This study intends to contribute to the literature by exploring the following aspects of Chinese workplace unions. We first elaborate the adapted two face framework of union effects in China, which includes a collective voice face and a Party-state face (Ge

2004; Lee and Liu forthcoming), explaining potential power sources and the process through which enterprise unions influence employment outcomes. Second, this study analyzes data collected from 1268 firms to measure the effectiveness of Chinese unions‟ collective voice face in influencing employment outcomes and firm performance. Unlike most studies that used union dummy as independent variable, this paper analyzes union voice activities among unionized firms and also compares the effects of non-voice unions and unions with a collective voice face.

What do Chinese enterprise unions do: power sources and their two faces

The All-China Federation of Trade Unions (ACFTU) is the only official trade union in China, with a pyramidal, top-down structure consisting of three tiers, i.e., the national, regional, and primary levels. At the bottom level, primary unions are organized according to the principle of enterprise unionism (Seung 2000: 49). In general, ACFTU performs a dual role, i.e., acting on behalf of the nation’s collective good while protecting workers’ rights and interests.

1 Ratios calculated using data from Chinese Trade Unions Statistics Yearbook (2010) and China Statistics Yearbook (2010).

Particularly in the workplace, Chinese enterprise unions, as reported in the Trade

Union Statistics Yearbook in 2008, engage in six broad categories of activities: (1) representing workers’ interests ( e.g., collective consultation), (2) participating in management on behalf of the workers (e.g., organizing SWCs, opening corporate affairs, and serving in the board of directors or the supervisory board), (3) mediating labor disputes (chairing enterprise labor dispute mediation committees), (4) supervising law enforcement (e.g., labor protection, production safety, and labor laws), (5) dealing with human resource management (HRM) and welfare issues (e.g., training, recreation and entertainment activities, employee mutual cooperative insurance programs, and financial aid for the needy), and (6) mobilizing the workforce to increase productivity

(e.g., organizing labor emulations, rationalization suggestions, and technical innovation programs). Generally, workplace unions have triple roles in helping workers

(representation and participation), the Party-state (defusing labor disputes and supervision), and employers (HRM functions and mobilization).

Critics of China‟s unions have legitimate reasons to believe that workplace unions are useless in protecting workers‟ rights and interests. In fact, since unions at all levels accede to the leadership of the Chinese Communist Party (CCP), experts have questioned whether ACFTU is a trade union at all (e.g., Taylor and Li, 2007).

Enterprise unions have neither the power nor the muscle to secure economic gains for workers in the absence of independent unions and the right to strike. Employers are never under pressure to respond to union proposals/ demands or negotiate a compromise, if ever the enterprise unions make such demands. Examination of the process that most directly influences terms and conditions of employment shows that the collective consultation and the collective contract system implemented since mid-1990s by no means match the Western style collective bargaining (Chen 2007:73;

Warner and Ng 1999). In short, Chinese workplace unions lack the power, wielded in the Western adversarial industrial relations model, to influence wages and benefits.

However, China has its own institutional arrangements in the workplace, with unions having different functions and sources of power. Unions are mutable social institutions that operate differently under different institutional settings (Freeman 2005:

649). Employment relations institutions in China are designed to be consensual and unitary rather than adversarial and plural. Chinese enterprise unions operate under a collaborative logic, which differs greatly from a confrontational model. Workers are entitled to participate in “democratic management” (i.e., the right to information, consultation, and co-determination) by the Constitution of the People‟s Republic of

China (1982, Article 16). Many workplace institutions, including CCP branches, Staff and Worker Congress (SWC), and the officially endorsed enterprise unions, are instituted to promote democratic management as well as enforce Party-state control.

Thus, although Chinese enterprise unions lack the power derived from organized labor

(Chen 2009), institutions such as CCP branches and SWCs serve as their potential sources of power.

Enterprise unions submit to the leadership of CCP branches, which, in turn, considerably influence the power relationship between management and union. In the pre-reform era, CCP branches played an important role in managing the work units, but their power was reduced relative to that of management after the economic reform (Zhu and Chan 2005:11). Nonetheless, the Party has compensated for its reduced role by getting involved in labor issues via unions (Chan 2000; Warner and Ng 1999:306). The unions also benefit from the Party‟s support at the enterprise and national levels (Clarke et al. 2004: 243). Clarke et al. (2004), in their study of collective consultation in China, found that CCP branches, if they exist in the enterprise, will review the collective

contract and may persuade a reluctant management to accept unions‟ proposals, and that holding concurrent posts as CCP secretary or deputy gives enterprise union chairmen considerable authority to ensure that the management abides by relevant laws and regulations (p. 243).

Another potential power source for enterprise unions is the SWCs2. Enterprise unions are responsible for convening SWCs, organizing the election of SWC representatives, soliciting grassroots opinions to submit to the congress, and executing the decisions made by the congress (Zhu and Chan 2005: 11-2). Although theoretically enterprise union is accountable to the SWC, in practice, it is the union that takes charge of SWC. SWC is the enterprise unions‟ power base in this organizational structure (Zhu and Chan 2005:12). Enterprise unions may affect employment outcomes by influencing the proposals submitted to the Congress and implementing the decisions made. SWCs have the right to information and veto or determination power over some policies in

State-owned enterprises (SOEs), discuss and ratify collective contracts (Labor Law,

Article 33), discuss and comment on work rule formulation and modification (Labor

Contract Law, Article 4). Chen and Chan‟s (2010) case study in a shareholding company showed that the enterprise union “borrows” the SWC‟s legal power to negotiate better deals. The union leaders, to increase employer contribution to employees‟ mandatory medical insurance, submitted a proposal to the SWC and insisted on implementing it once it was passed and formalized (p. 54).

Outside of the workplace, regional unions and the government may also serve as sources of power for enterprise unions. In the formal union structure, enterprise unions are led by regional unions, which are part of the government. Regional unions help

2 The central government restored the SWC in 1981 in SOEs, after suspending it during the Cultural Revolution (1966-76), as a mechanism to curtail the expanded managerial autonomy and power (Taylor et al 2003:138). The SWC system shares some characteristics with the European works councils designed to provide workers with some participatory rights in the workplace (Zhu and Chan 2005: 27).

establish enterprise unions and may also influence union functions. Examples of regional unions or the government influencing enterprise unions abound. Pressure from the local governments was instrumental in organizing 24 Walmart supercenters in

China within four weeks in 2006: the most telling example is when the mayor of

Fuzhou city threatened to sever business deals with Walmart if the global giant did not allow the setting up of unions (Zhang 2009: 203). Pressure from ACFTU also promoted collective consultations in Walmart stores. The support from regional unions is most evident at times of open crises such as a strike. For instance, while curbing the wave of spontaneous strike that swept through the entire Dalian Development Area in 2005, regional union cadres, acting on behalf of the government, together with enterprise unions, which were too weak or reluctant to confront employers single-handedly, negotiated with employers, coercing them to concede and increase the workers‟ salaries

(Chen 2010). However, it can also be argued that in this case, workers effected the change by taking collective actions, which then caught the attention of regional unions and the government.

Given these three potential power sources, what do enterprise unions stand for? On the one hand, they represent the interests of the Party-state, gaining support from the

CCP branches or regional governments. On the other hand, as labor organizations, they also represent the workers, deriving power from worker pressure. Thus, Chinese enterprise unions have two faces: a constrained collective voice face and a Party-state face (see also Ge 2004; Lee and Liu forthcoming). Unlike their Western counterparts,

Chinese unions do not have a monopoly face in the absence of freedom of association and the right to strike. Their constrained collective voice face refers to representing workers‟ rights and interests to the extent and within the channels tolerated and controlled by the Party-state and management. It is “constrained” because institutional

constraints do not allow extreme expression of voice such as a strike, and employers can manipulate and dominate the power source and the process of union representation, e.g., SWC and collective consultation. Given the unions‟ lack of power from organized labor and the dominance of management at the workplace (Chen 2009), the effectiveness of this collective voice face partly depends on managerial strategies. That is, the enterprise unions serve as the channel for workers‟ collective voice only when the employers permit them to perform such functions.

The Party-state face refers to the union‟s role in linking the Party-state and the workplace vertically by transmitting policies and directives to the workplace and ensuring their enforcement. This face derives from the very nature of the Chinese union: a state corporatist apparatus used by the Party-state to exercise control over industrial workers (Chan and Senser 1999). Unions monitor law enforcement and help the Party-state to maintain industrial peace and social stability. Another reason for the existence of the Party-state face is that the Party and the government are important power sources for unions. This face empowers trade unions to balance their relations with employers and propose outcomes favorable to workers as long as they are within the scope of the Party policy (Clark et al. 2004:243).

All Chinese enterprise unions, out of their nature, have a Party-state face, while some of them also have a constrained collective voice face, i.e., opportunities to represent the workers. With regard to effects on employment outcomes, the constrained voice face implies better terms and conditions for employees, while the Party-state face strives for conformance to the conditions defined by law and other Party-state regulations. However, actual effects depend on the power strength of the unions, and this paper tries to examine the effectiveness of Chinese enterprise unions‟ collective voice face.

What do we know about union effects in China?

This section presents empirical evidence of union effects on employment outcomes and firm performance in China. Table 1 summarizes data source, methods, and results of existing studies on union effects (eight in total to our best knowledge).

Almost all the studies (except Yao et al. 2008) used enterprise level data. This is different from most studies in the U.S. where union effects are analyzed at the individual level after controlling for individual human capital. However, enterprise level data is more appropriate in the Chinese context for these reasons: there can be only one union in one enterprise, workers and staff at all levels including senior managers are eligible for union membership, collective contracts once concluded cover all employees, and union membership is more of a deal between the employer and regional union cadres than workers‟ choice (Lee and Liu forthcoming; Liu 2010).

Therefore, the differences in employment conditions between union and non-union members of the same company cannot be attributed to union effects.

[Insert Table 1 about here]

Studies show that unionization positively associates with mandatory social insurance, collective contract, and training (all required by law) (Ding et al. 2002; Ge

2004; Yao et al. 2008; Yao et al., 2009; Yao and Zhong 2008; Lu at el 2010). Findings related to union wage effect are inconsistent: unions may create wage premiums (Ge

2004; Yao et al. 2008; Yao et al., 2009; Yao and Zhong 2008) or may not increase wages (Ding et al. 2004; Lu et al. 2010; Liu and Lee 2009). With regard to firm performance, unionization correlates positively with productivity (Ge 2004; Lu et al.

2010) and R&D investment (Ge, 2004), and has zero (Lu et al. 2010; Liu and Lee 2009) to negative (Ge 2004; Kim 2008) relationship with profitability.

However, caution should be exercised when interpreting these results. They may be biased due to omitted variables such as employer competitive strategies and law-abiding behaviors, which may correlate with both unionization and employment outcomes (Lee and Liu forthcoming). For example, the positive relationship between unionization and mandatory benefits may result from employers‟ law compliance strategy: employers allowing unionization (which is required by law for firms with more than 25 employees) may also comply with employee benefits regulations. Thus, the positive relationships may prove to be spurious when adding employer strategy variables.

Moreover, most of the studies did not differentiate between unions. ACFTU‟s traditional organizing method leads to many paper unions, but some enterprise unions, under the leadership of innovative regional union cadres or enterprise union leaders, are active in protecting workers‟ rights (Liu 2009). It is important to distinguish paper unions from the functioning ones to understand union effects in China. Liu and Lee‟s

(2009) analysis shows that unions with collective consultation have stronger effects than those that do not.

This study contributes to our understanding of economic effects of Chinese unions by measuring the effects of various union voice activities and different types of unions.

Most of the earlier studies used a binary dummy variable for unions, which failed to differentiate between union activities. In this study, we first analyze the effects of three union voice activities within unionized firms. Confining the sample to unionized firms may reduce the impact of simultaneous determination of union existence and employment outcomes. Secondly, we divide unions performing various activities into different groups and examine their effectiveness with regard to employment outcomes.

We also control for employer strategies using two variables: adopting corporate social

responsibility (CSR) as a long-term strategy and employer law compliance record.

Although ideally employers‟ industrial relations strategies would be measured by their

IR ideologies (e.g., Godard, 1997), given the lack of a valid measure of IR ideology in

China, this paper uses CSR as a proxy to capture employers‟ general approach toward employment relations (elaborated in the measure section below).

Yao and Zhong (2008, 2011) used the same dataset to analyze union effects on hourly wage, working hours, and pension coverage. However, unlike their analysis, which used a zero-one union dummy, this study focuses on unions‟ collective voice activities and differentiates between types of unions. We also expand dependent variables to include firm performance.

Data and Measure

Sample

Enterprises above a designated size across 12 cities have been selected by stratified random sampling from a database of industrial enterprises, maintained by the

National Bureau of Statistics of China (NBSC). The NBSC database includes all SOEs and non-state-owned enterprises with annual sales exceeding 5 million Yuan (around

625 thousand USD in 2005) but does not include construction and transportation firms.

The 12 cities are not randomly selected but rather are chosen to ensure representation of regions with different levels of economic development. Four cities have been selected from each of these Chinese regions: east, central, and west (see Shen and Yao

2008 for detailed description of the firms). After selecting the cities, a multi-stage stratified random sampling method is adopted to ensure balanced representation. For the first stratum, firms are divided into three categories: SOEs, domestic private enterprises (DPEs), and foreign-invested enterprises (FIEs). Next, firms are classified

as small, median, or large, on the basis of the firm size definition provided by the State

Economic and Trade Commission (SETC, 2003)3. Finally, enterprises are randomly chosen from each subsample.

International Finance Corporation conducted this survey about CSR in China in

2006.4 The original plan was to survey 100 firms in each city, but some cities surveyed more than 100 firms, and the final sample is 1268 enterprises. In addition, the NBSC provided data for the sample firms‟ enrolled ownership status, industry, annual financial performance, average employees, and total yearly wage in 2005. This analysis employs data from the survey and NBSC records.

With respect to firm distribution in the sample, the share of SOEs (11%), DPEs

(69%), Hong-Kong, Macao, and Taiwan invested enterprises (HMTs, 9%), and FIEs

(12%) is comparable to the share of enterprises with corresponding ownership status in the national dataset: 12%, 67%, 10%, 11%, respectively (China Industry Economy

Statistics Yearbook, 2007). However, the average firm size of the sample is 743, much larger than the average firm size of 254 in the national dataset (China Industry

Economy Statistics Yearbook, 2007). The sample over-represents large enterprises and under-represents service sector enterprises, which accounted for less than 10%, because many service-based firms could not meet the criterion of 5 million Yuan of sales volume.

Measure

Table 2 provides information on definition and measurement of all variables. This analysis has four groups of dependent variables, all measured at the firm level: wage,

3 SETC considers employment, sales volume, fixed capital stock, and industry in determining firm size. 4 This dataset has been used by others, e.g., Yao and Zhong (2008, 2010) in their study of union effects on workers‟ welfare, and Shen and Yao (2008) in a study examing corporate social responsibility in China.

mandatory employment conditions, voluntary benefits, and firm performance. Wage includes yearly, monthly, and hourly wages. Yearly wage data are obtained from the

NBSC and divided by the total employees; the other two wages are calculated using data from the survey, which reported average monthly wage for workers, working days per week, and working hours per day. Hourly wage is calculated as monthly wage divided by four and further divided by weekly working days and daily working hours.

Firm performance measures include productivity and profitability. Productivity is measured as sales per employee and profitability as profit divided by fixed asset.

[Insert table 2 about here]

Mandatory employment conditions include individual labor contract with employees, illegal overtime5, and training density, besides the four social insurances, i.e., pension, medical, unemployment, and work-related injury. Individual labor contract is an important protection for workers in China because before the 2008 Labor

Contract Law workers had difficulties in claiming their rights or even proving their employment in labor disputes without labor contracts. Employers‟ refusing to sign labor contracts to avoid legal obligations is a serious problem in China. For example, in

2006, 12.4 million workers signed labor contracts with their employers after governmental labor inspection (Labor Statistics Yearbook 2007).

The survey provided information on social insurance coverage for workers, managers, and local employees. This analysis only considers insurance coverage of employees with local household registration (local employees) to avoid the impact of

5 Illegal overtime is calculated as the difference between actual weekly working hours and the maximum 53 hours allowed by Labor Law. The 53 hours are the sum of the normal, legal weekly working hours [44] and 9 maximum weekly overtime (maximum monthly overtime is 36 hours). Using actual working hours as a dependent variable may not be meaningful since fewer working hours might not be beneficial to workers, especially when associated with less pay.

different social insurance policies for non-local workers6. Further, Chinese unions are unitary and represent both managers and workers; differentiating workers and managers may not be appropriate. A final mandatory employment condition is training density: proportion of sales income spent in training. Voluntary benefits are measured by two variables: voluntary medical insurance cover for local employees and non-local employees.

The independent variables fall into five broad categories: union voice activities and status, managerial strategies, employee composition, organizational characteristics, and industry and localities. Three union voice activities considered in this paper are (1) whether the union concludes collective wage contract with the employer; (2) whether the union is consulted in labor dispute resolution; and (3) whether the union is important in managerial decision making. Another way to examine union voice effect is to consider the three union voice activities together and divide unions into different categories. A union is considered to have a collective voice face if it engages in any of the above activities. Conversely, a non-voice union is one that does not engage in any of these activities. Thus, with regard to union status, firms are classified into one of three groups: no union, with non-voice union, or having a union with a collective voice face. Among the 850 enterprise unions in the sample, 697 (82%) are unions with a collective voice face while 153 (18%) are non-voice unions. The rest of the sampled firms do not have unions.

For managerial strategies, two measures are used: CSR as a long-term strategy and law compliance record in 2005. CSR includes economic, legal, ethical, and philanthropic responsibilities multiple stakeholders (Carroll 1991), including employees. Although there is no consensus regarding Chinese managers‟ perception of

6 Different cities have different social insurance policies for employees without local household registration (migrant workers): Some treat migrant workers equally, while other cities put them in inferior schemes (Wu 2008).

CSR, employers who have adopted CSR as a long-term strategy may be more likely to abide by Chinese laws (including unionization requirement) and treat employees favorably. Law compliance is a dummy variable, with 1 indicating firms that did not attract fines after governmental inspection of compliance with laws related to environment, labor protection, product quality, and safety in 2005. Firms with good law compliance behavior are expected to at least provide better mandatory employment conditions.

Employee composition is captured by three variables: employee education, average worker tenure, and the percentage of employees without local household registration (migrant workers). The proportion of migrant worker may affect wage levels since migrant workers generally have lower levels of education (Cai 2005). The percentage of migrant workers in a company may also impact the local employees‟ wage and benefits since employers can save on labor costs by employing more migrant workers, who are usually discriminated by local policies (Wu 2008).

Organizational characteristics include size, capital intensity, market competition, market share, profit rate, external auditing, proportion of products exported, being privatized from SOEs or collectively owned enterprise (privatized), and ownership status. Other things being equal, firms with a large size, higher capital intensity, operating in low competition markets, having a larger market share or higher profit rate are expected to provide better working conditions. Firms subject to regular external auditing are expected to provide better working conditions and be more likely to be unionized due to social pressure. Enterprises transformed from SOEs tend to inherit workplace practices from their predecessors such as enterprise unions and culture

(Chen and Chan 2010); hence, privatization was included to control for the potential legacy of SOE practices.

Gallagher (2001) argued that variations in labor practices are no longer primarily determined by ownership. Instead they are function of whether the firm‟s products are intended for export or domestic: domestic market-oriented firms tend to adopt formalized labor practices and cooperate with local governments to reduce potential public relation problems. However, export-oriented firms tend to adopt market labor practices that are arbitrary and often exploitative (p. 95–96). Therefore, firms with a larger proportion of export products are expected to provide less favorable working conditions. Finally, it is argued that DPEs have the most exploitative management practices and union coverage tends to be low in these enterprises (Chan 2006: 284;

Chen and Chan 2010). Types of ownership have been included to control for their correlation with unions and employment outcomes.

The industry of the sampled firms is determined from the NBSC data, which is based on the Chinese Industry Classification System. Controlling for industry effect to the first digit yields seven industries: agriculture (274), mining (232), manufacturing

(563), utilities (99), geological exploration and water management (3), trade and catering (2), and finance and insurance (5). The last four industries are combined into one industry given their relatively small size. Finally, 11 cities dummies are included to control for local economic or legislative differences.

Findings

Table 3 provides the means, standard deviations, and correlation matrix for selected variables. CSR as a long-term strategy correlates positively and significantly with the existence of unions with a collective voice face and all employment outcomes. Law compliance also correlates positively with all of the mandatory employment outcomes, except illegal overtime and training density. These suggest that these two managerial strategy variables captured employers‟ general approaches toward managing

employees. As expected, unions with a collective voice face associate positively with all the wage and benefits variables7, while non-voice union has insignificant or negative correlation with these employment outcomes. This correlation pattern indicates systematic variation in union effects between unions without any representation roles and unions with a collective voice face.

[Insert Table 3 about here]

Ordinary least square regression is used to examine whether union voice makes a difference in the workplace. First, the effects of union voice activities within unionized firms are presented. Given the potential measurement errors and important omitted variables in this dataset (e.g., firm age), discussion of the results and conclusions are centered on coefficients with p values smaller than .05 (results with p values between .05 and .10 are briefly mentioned).

Union voice activities may not create wage premium

Table 4 presents regression results of union voice activities and wages. None of the voice activities correlate significantly with average yearly wage (data from the NBSC); the existence of collective wage agreement associates positively with hourly wage and monthly wage (p < .10). Surprisingly, unions engaged in managerial decision making

(participation) associate with low hourly (p < .10) and monthly wages (p < .01). These negative coefficients may be attributable to an important omitted variable in this dataset: firm age. A possible explanation is that older firms are more likely to involve unions in decision making, and these firms are also more likely to offer lower wages in exchange of employment stability, which is a legacy of the planned economy system. In

7 Unions with a voice face have significant and negative relationship with illegal overtime due to the way illegal overtime is defined.

general, union voice activities in China, in the absence of the muscle derived from a monopoly face, do not secure higher wages for workers.

[Insert table 4 about here]

Employer strategies (law compliance and adopting CSR as a long-term strategy) and the share of exported products do not affect wage levels. Higher percentage of migrant workers is associated with lower yearly wage (p <. 05), but not monthly or hourly wages. Relative to SOEs, DPEs associate with lower hourly (p < .01) and monthly wages (p < .01); HMTs, with lower hourly wage (p < .05); and FIEs, with higher yearly wage (p < .01). Thus, ownership status associates with different wage levels.

Union voice activities associate with a few mandatory employment conditions

Table 5 reports regression results of union voice activities and mandatory employment conditions8. All the three voice activities have a positive and significant correlation with individual labor contract coverage. Collective wage contract associates with more expenditure on training (p < .01), and participation in management is positively correlated with work-related injury insurance coverage (p < .10). Union voice activities associate significantly with three of the seven mandatory working conditions but fail to influence the other four.

[Insert Table 5 about here]

To test whether union voice activities improve mandatory employment conditions by enhancing employer law compliance, regression analysis recommended by Baron and Kenny (1986) is used to test mediation. Only participation predicts employer‟s law compliance behavior (p = .089). Law compliance partially mediates the

8 Except illegal overtime, all the other six outcomes are ordinal dependent variables to certain extent. Ordered probit models (results not reported) yield similar results as OLS regression.

relationship between participation and work injury insurance coverage: the positive relationship between participation and work injury insurance coverage, which is significant at the .05 level (b = 0.298), becomes significant at the .10 level (b = 0.225) with the addition of law compliance. This finding weakly supports the notion that law compliance partially mediates union voice effects.

Firms with good records of law compliance tend to provide pension (p < .10) work-related injury (p < .05), and unemployment insurance (p < .10) to more employees. CSR as a long-term strategy has positive and significant correlations with pension (p < .01), medical (p < .01), work-related injury (p < .05), labor contract coverage (p <.05), and training density (p < .10), but not with unemployment insurance or illegal overtime. The percentage of migrant workers correlates positively with pension; export orientation correlates with more training expenditure, though both are significant only at the .10 level. Compared to SOEs, DPEs associate with lower medical insurance (p < .05) and work-related injury coverage (p < .10), while FIEs spend less money on training (p < .05). In general, employer strategies, export orientation, and ownership type influence firms‟ provision of mandatory employment conditions.

Union voice activities have weak relationship with voluntary benefits

Table 6 captures the effects of union voice activities on voluntary benefits. Here, we focus on the coverage of voluntary (commercial) medical insurance for local and non-local employees. Collective wage contract associates positively with higher coverage of both voluntary insurances (p < .05 for coverage among local employees, and p < .10 for non-local employees). Further, HMTs provide voluntary benefits to more local employees than SOEs (p < .05). Higher share of exported products correlates with less medical insurance coverage among local employees (p < .05), while employer strategies do not have any significant effects. Thus, results show that

ownership and export orientation influence employer benefits provision, partially supporting Gallagher‟s (2001) hypothesis.

[Insert Table 6 about here]

Union voice activities and firm performance

Table 7 provides regression results for productivity and profitability. Results in the last two columns also control for productivity and profitability in 2004, and therefore reflect the effects of union voice activities on productivity and profitability change, respectively. Collective wage contract associates with higher productivity change (p < .10). Surprisingly, participation associates with lower productivity (p <

.05) and being consulted in labor disputes exhibits a negative relationship with productivity change (p < .10). Given that Chinese enterprise unions do not have a monopoly face to curtail managerial flexibility, these negative coefficients are quite unexpected. One plausible explanation is that older firms (information not available) are more likely to involve unions in decision making and also tend to have lower productivity because of their old equipment.

[Insert Table 7 about here]

Union participation is associated with lower levels of profitability (p < .05) and profitability change (p < .10). In Western countries, this negative relationship may be attributed to unions‟ reducing employers‟ share of profit, by increasing wages and benefits for workers. An alternative explanation in the Chinese context is that employers have to fund union activities, and more active unions use more money from the employers. In other words, the negative relationship mainly reflects the institutional arrangement of union finance in China rather than union power or effectiveness in the workplace. Given that participation does not have significant effect on voluntary

benefits, associates with lower hourly and monthly wages, shares a significant and positive correlation with only two of the seven mandatory employment conditions, the latter explanation, i.e., reflecting Chinese institutional arrangement, seems more plausible.

With regard to employer strategies, adopting CSR as a long-term strategy seems beneficial in terms of productivity change (p < .10), profitability (p < .05), and profitability change (p <.05). Higher share of export-oriented products is associated with lower productivity and productivity change (p < .01). SOEs associate with lower productivity levels than other non-state owned firms and with lower profitability than

DPEs.

Table 8 summarizes the above results. In terms of union voice activities, being consulted in labor disputes has least significant results and the two significant coefficients are only significant at the .10 level. The results for collective wage contract are highly consistent with theoretical expectations of union voice effect, associating positively with wages and benefits. Coefficients with p values smaller than .05 indicate that union voice activities do not create wage premium or improve firm performance; they associate with three (out of nine) working conditions. If viewed as indicators of unions‟ collective voice face, these results suggest that Chinese enterprise unions have a weak collective voice function.

Comparing different unions

Table 9 shows the results of using union status as independent variable. Firms having unions with a collective voice face or non-voice unions are compared to union-free firms. For each dependent variable, F-tests were used to determine if the difference between the coefficients on non-voice union and union with a collective voice face is significant (reported in the second to last column of the table). In addition,

in order to facilitate comparison with other studies that used union dummy, significant levels for union from regressions using union dummy are reported in the last column of

Table 9. Non-voice unions and unions with a collective voice face do not have significant relationships with any measures of wage, and the F-test shows that unions with a collective voice face are not significantly different from non-voice unions.

[Insert Table 9 about here]

Non-voice unions associate positively with pension and unemployment insurance coverage (p < .05). Besides these two insurances, unions with a collective voice face also exhibit significant and positive correlations with labor contract coverage (p < .01) and voluntary medical insurance for local (p < .05) and migrant workers (p < .10).

These results suggest that firms with non-voice unions provide somewhat better mandatory benefits for employees than non-union firms, while firms having unions with a collective voice face offer even better benefits. Unions with a voice face tend to correlate with better benefits than non-voice unions. F-tests show that this difference is only significant for two outcomes: individual labor contract coverage and training density. Surprisingly, none of the union types associate significantly with training density, but firms with functioning unions tend to spend more money on training than firms with non-voice unions. This is because firms with non-voice unions tend to provide less training than union-free firms (i.e., the coefficient for non-voice union is negative but not significant) while unions with a collective voice face correlate positively, but not significantly, with training density.

Mirroring the effects of union voice activities, unions with a voice face associate with lower productivity (p < .10) and profitability (p < .05). The negative relationship between non-voice union and profitability (p < .10) further supports the hypothesis that the negative effects of union voice on profitability may reflect the institutional

arrangement of union finance rather than the union‟s power to direct profits toward workers in China. Neither type of unions associate significantly with productivity or profitability change.

In summary, Chinese enterprise unions, whether with or without a collective voice face, do not increase wages and generally do not impact firm performance. They typically tend to associate with employee benefits. Unions with a collective voice face secure more benefits than non-voice unions, but the difference is only significant for two outcomes.

Robust check in subsamples

We repeat the same set of regressions within subsamples of DPEs (N = 809) and manufacturing firms (N = 562) and report results in Table 10 and 11, respectively.

Many of the above results hold true in the DPE sample, while many coefficients insignificant in the manufacturing subsample. In general, union voice effects on wage and firm performance are not stable across the two subsamples: some of them become insignificant in the two smaller samples. The positive and significant relationship between union voice activities and work injury insurance and individual labor contract coverage holds across the two samples, so does the positive relationship between unions with a collective voice face and the coverage of pension, unemployment insurance, and individual labor contract. Further, unions with a collective voice face are significantly different from non-voice unions in terms of at least two mandatory employment conditions in the subsamples. In short, in all the three samples, Chinese unions‟ collective voice is positively associated with a few benefit outcomes, especially mandatory benefits.

[Insert Table 10 about here]

[Insert Table 11 about here]

Different from Yao and Zhong‟s (2008, 2011) findings using the same dataset, this paper shows that unions are not associated significantly with wages. While they state that union effect on pension coverage is robust across various specifications, these results show that only unions with a collective voice face have a significant and positive relationship with pension coverage. The effect of non-voice unions does not hold among manufacturing firms.

Conclusions

This study examined the effects of union collective voice on wage, benefits, and firm performance using a sample of 1268 firms in China. Despite of the explosion of IR institutions at the Chinese workplace, such as unions, collective consultations, and

SWCs, in the last decade, the basic IR framework remains unchanged: no independent union or right to strike. Different from their counterparts in developed countries,

Chinese unions do not have a monopoly face, though the Party-state‟s support appears to serve as a functional equivalent of the strike action in balancing bargaining power under the current political atmosphere (Lee 2009: 9). Without a strong monopoly face, enterprise unions‟ supposed collective voice function is very limited: union voice activities do not improve wage or firm performance; they only tend to associate with a few benefits. Moreover, enterprise unions fail to deliver some mandatory employment benefits, for which they may seek support from the Party-state.

There are important limitations of this study. First, because of data limitation, it was not possible to control for gender composition and firm age, which may affect employment outcomes in this analysis. Further, information about union governance, such as direct election of union chairmen, or union power, such as chairmen holding posts as Party-branch secretary or deputy has not been included. Second, the cross-sectional nature of the data impedes causal inference. A precise assessment of

causal channels would require a longitudinal dataset or detailed study of the mechanism through which union activities affect employment outcomes. Third, given that this sample was drawn from a database of large firms in China and the 12 cities were not randomly selected, the generalizability of these findings is limited. To the extent that large firms are more likely to have unions and allow unions to perform voice functions, the results in this study are upwardly biased.

Although enterprise unions‟ collective voice face is not very effective without the power from the monopoly face, the ACFTU‟s effort to expand collective consultation and promote enterprise unions‟ participation in management vitalizes the paper unions and channels the workers‟ collective voice to the management, to a limited extent. Its effort cannot be dismissed as totally meaningless for or irrelevant to workers, though much is desired of its representational role. As researchers continue to identify the ways in which Chinese unions represent and protect workers, a future challenge is to illuminate the mechanisms through which unions influence outcomes. Although both

Chinese enterprise unions and German Works Councils cannot initiate strikes, works councils are associated with higher wages in Germany (Addison et al. 2001; Hubler and

Jirjahn 2003). One potential source of difference is that the works council is elected by the employees, while most Chinese enterprise union leaders are selected by CCP branches, regional unions, or management (Qiao 2010). Future research may examine whether more democratic enterprise unions, where the union chairmen are directly elected, are more effective in representing workers in China.

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Table 1 Data, methods, and findings of studies on union effects in China Ding et al. Ge Yao et al. Kim Lu et al. Yao & Zhong Yao et al. Liu & Lee Year of data mid-1990s 2004 2004 2004 2006 2006 2007 2008 Year of publication 2002 2007 working paper 2009 2008 2010 2008 2008 conference paper 2009 Sample size (firm level) 62 1,451,137 Over 10,000 224,433 3239 1268 3749(individual level) 600 Method ANOVA OLS OLS Hierarchical 2SLS 2SLS OLS OLS Measure of unionization

Union dummy Yes Yes Yes Yes Yes

Union density Yes Yes Yes Yes

Findings

sig,+; strongest for Mandatory social insurance sig,+ sig,+ sig,+ sig,+ members of elected unions Collective contract sig, + sig,+ sig,+

sig,+; strongest for Training sig,+ sig,+ members of elected unions sig,+; strongest for Wage ns sig,+ sig,+ ns sig,+ ns members of elected unions Union dummy ns; Supplementary benefits sig +, for unions with CB Working hour sig,- sig,-

sig,-; strongest for Union dummy ns; Employee turnover ns members of elected unions sig -, for unions with CB Union dummy ns; Labor-management conflicts sig -, for unions with CB Productivity sig,+ sig,+

Profitability sig,- sig,- ns ns

R&D investment sig,+

Selected control variables

Employee composition Yes Yes Yes Yes

Managerial strategy Yes

Human resource practices Yes

Ownership status Yes Yes Yes Yes Yes

Note: ns = non-significant; sig = significant; CB = collective bargaining.

Table 2 Variable measures

Variable Definition Union voice activities 3 activities: being consulted in labor disputes resolution; participating in managerial decision making; concluding collective wage contract with employer. Non-voice union A dummy variable = 1 if the firm has a union but the union is not active in any of the three voice activities, else 0. Union with a voice face A dummy variable = 1 if the firm has a union and the union is active in any of the three union voice activities, else 0. Ln wage Natural log of firms' average yearly, monthly, or hourly wage Mandatory benefits Pension The coverage of these four insurances: 1 = 20%, 2 = 20–40%, 3 = 40–60%, 4 = 60–80%, Medical insurance and 5 = 80–100% Work injury insurance Unemployment insurance Labor contract coverage Signing labor contract with workers: 1= no contracts, 2 = with some of them, 3= with all of them Illegal overtime Actual weekly working hours minus maximum legal weekly working hours (53) Training density The proportion of sales income spent in training: 1= less than 1‰, 2 = 1–3‰, 3 = 3–5‰, 4 = more than 5‰. Voluntary benefits Vol. medical insurance (local The coverage of this insurance: 1 = 20%, 2 = 20–40%, 3 = 40–60%, 4 = 60–80%, and 5 employees) = 80–100%. Vol. medical insurance (migrant workers) Firm performance Productivity Natural log of sales income divided by total employment Profitability Profits divided by total fixed assets Employee composition Employee education The share of employees with higher education: 1= 0–20%, 2 = 20–40%, 3 = 40–60%, 4 = more than 60% Worker tenure The natural log of average worker tenure Migrant workers The share of employees without local household registration: 1= 0–20%, 2=20–40%, 3 = 40–60%, 4 = 60–80%, 5 = 80–100% Employer strategy CSR as a strategy A dummy variable = 1 if the firm adopts CSR as a long term strategy, 0 otherwise Law compliance A dummy variable = 1 if the firm attracted no fines after governmental inspection of Compliance with laws related to environment, labor protection, product quality, or safety in 2005, and = 0 if the firm attracted fines. Organizational Characteristics Ln size Natural log of total employment Ln capital intensity Natural log of fixed asset per employee Export intensity The share of products exported Market competition Competitiveness of market for firm's major product: 1 = low, 2 = moderate, 3 = fierce Market share Major product's market share in provincial market: 1 = 0–1%, 2 = 1–3%, 3 = 3–5%, 4 = 5–10%, 5 = 10–20%, 6 = more than 20% Profit rate Natural log of profit divided by sales External auditing A dummy variable = 1 if the firm has regular external auditing, else 0. Privatized A dummy variable = 1 if the firm was privatized from SOEs or collectively owned enterprise, else 0. Ownership Categorical variable: 0 = state-owned enterprises (SOEs), 1 = domestic private enterprises(DPEs), 2 = Hong-Kong, Macau, or Taiwan invested enterprises(HMTs), 3 = foreign invested enterprises(FIEs)

Table 3 Means, standard deviations, and correlations among selected variables

Variable N Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1.Non-voice union 1233 0.12 0.33 2.Union with a voice face 1233 0.57 0.50 -0.429* 3. Ln hourly wage 1220 1.69 0.41 -0.005 0.136* 4. Ln yearly wage 1177 9.51 0.55 -0.037 0.088* 0.487* 5. Pension 1168 3.70 1.62 0.019 0.211* 0.420* 0.305* 6. Mand. Medical insur. 1101 3.41 1.78 -0.002 0.177* 0.438* 0.353* 0.727* 7. Work injury insur. 1138 4.00 1.53 -0.024 0.162* 0.350* 0.255* 0.543* 0.559* 8. Unemployment insur. 1119 3.31 1.83 0.035 0.194* 0.410* 0.339* 0.721* 0.747* 0.554* 9. Illegal overtime 1248 -7.84 7.28 -0.001 -0.146* -0.491* -0.140* -0.345* -0.336* -0.210* -0.355* 10. Training density 1181 1.54 0.73 -0.085* 0.146* 0.120* 0.102* 0.148* 0.140* 0.082* 0.098* -0.182* 11. Labor contract cov. 1244 2.73 0.54 -0.062* 0.257* 0.264* 0.182* 0.338* 0.335* 0.249* 0.317* -0.233* 0.133* 12. Vol. med. ins.loc. 970 2.07 1.63 -0.017 0.109* 0.294* 0.269* 0.323* 0.425* 0.281* 0.379* -0.182* 0.125* 0.143* 13. Vol. med. ins. migr. 940 1.90 1.54 -0.027 0.096* 0.283* 0.242* 0.297* 0.395* 0.272* 0.361* -0.166* 0.122* 0.140* 0.895* 14. Productivity 1177 5.61 1.00 -0.008 -0.055 0.202* 0.381* 0.0433 0.036 0.112* 0.018 0.074* -0.017 0.055 0.147* 0.136* 15. Profitability 1177 0.48 1.45 -0.033 -0.046 -0.060* 0.031 -0.091* -0.066* -0.059 -0.090* 0.067* 0.012 0.012 0.011 -0.004 0.140* 16. Migrant workers 1189 2.07 1.33 0.006 -0.200* 0.117* 0.100* 0.084* 0.074* 0.085* 0.075* 0.113* -0.068* 0.006 0.102* 0.157* 0.0911* -0.051 17. Export intensity 1265 0.41 0.49 0.019 -0.006 0.071* 0.103* 0.069* 0.074* 0.034 0.110* 0.039 0.063* 0.056* 0.016 0.052 0.032 -0.051 0.192* 18. Law compliance 1213 0.87 0.34 -0.033 -0.053 0.060* 0.092* 0.094* 0.090* 0.101* 0.120* -0.009 0.014 0.090* 0.057 0.073* 0.006 -0.020 0.110* 0.059* 19. CSR as strategy 1148 0.63 0.48 -0.053 0.147* 0.114* 0.094* 0.203* 0.169* 0.149* 0.153* -0.110* 0.154* 0.214* 0.090* 0.103* 0.021 -0.003 -0.004 0.074* 0.052 Note: *, p < .05.

Table 4 Union voice activities and wages Hourly wage Monthly wage Yearly wage Collective wage contract 0.055 * 0.052 * 0.035 (0.032) (0.027) (0.043)

Being consulted in labor disputes 0.049 0.029 0.051 (0.030) (0.025) (0.040)

Participation -0.057 * -0.069 *** -0.031 (0.031) (0.026) (0.041)

Employee education 0.088 *** 0.055 *** 0.095 *** (0.020) (0.017) (0.027)

Ln tenure 0.057 *** 0.044 ** 0.048 * (0.022) (0.018) (0.029)

Migrant workers -0.001 -0.000 -0.043 ** (0.016) (0.013) (0.020)

Law compliance 0.025 0.003 0.071 (0.041) (0.034) (0.054)

CSR as strategy 0.025 0.008 0.044 (0.032) (0.026) (0.042)

Ln size 0.036 *** 0.031 *** -0.014 (0.013) (0.011) (0.017)

Ln (capital intensity) 0.060 *** 0.056 *** 0.128 *** (0.015) (0.012) (0.020)

Market competition -0.096 *** -0.085 *** -0.000 (0.033) (0.028) (0.044)

Export intensity -0.001 -0.000 -0.000 (0.001) (0.001) (0.001)

Market share 0.011 0.008 0.001 (0.009) (0.007) (0.012)

Privatized 0.017 -0.003 -0.045 (0.044) (0.037) (0.059)

External auditing 0.024 0.027 0.063 (0.039) (0.033) (0.052)

Profit rate 0.430 0.392 *** 0.610 *** (0.137) (0.114) (0.180)

DPEs -0.161 *** -0.131 *** 0.007 (0.051) (0.043) (0.067)

HMTs -0.155 ** -0.108 0.052 (0.079) (0.066) (0.104)

FIEs 0.018 -0.014 0.291 *** (0.065) (0.055) (0.086)

F for industry dummies 6.13 *** 5.41 *** 4.50 *** F for city dummies 13.38 *** 16.69 *** 10.57 *** Number of obs. 573 576 579 R-squared 0.467 0.477 0.415 F 14.307 *** 14.959 *** 11.731 ***

Note: SE in parenthesis; constants are not reported; ***, p < .01, ** p < .05, *, p < .10. DPEs = Domestic Private Enterprise; HMTs = Hong-Kong, Macao, and Taiwan invested Enterprises; FIEs = Foreign Invested Enterprises.

Table 5 Union voice activities and mandatory employment conditions

Unemployment Labor Illegal Training Pension Health insur. Work injury insur. contract cov. overtime density Collective wage contract -0.038 -0.119 0.026 -0.144 0.123 *** -0.500 0.226 *** (0.119) (0.143) (0.132) (0.139) (0.038) (0.614) (0.066)

Being consulted in labor * 0.040 0.147 0.040 0.112 0.068 -0.433 0.088 disputes (0.112) (0.132) (0.123) (0.130) (0.035) (0.576) (0.062)

Participation 0.021 0.151 0.225 * -0.069 0.082 ** -0.301 0.102 (0.115) (0.137) (0.127) (0.134) (0.036) (0.588) (0.063)

Employee education 0.275 *** 0.288 *** 0.263 *** 0.330 *** 0.038 -1.527 *** 0.131 *** (0.076) (0.090) (0.084) (0.088) (0.024) (0.389) (0.041)

Ln tenure 0.553 *** 0.473 *** 0.311 *** 0.642 *** 0.034 -1.041 ** -0.023 (0.081) (0.095) (0.089) (0.093) (0.025) (0.415) (0.044)

Migrant workers 0.111 * 0.062 0.107 0.104 0.017 0.145 0.006 (0.058) (0.073) (0.068) (0.068) (0.018) (0.293) (0.031)

Law compliance 0.267 * 0.285 0.419 ** 0.314 * 0.066 -0.974 0.103 (0.152) (0.178) (0.166) (0.174) (0.048) (0.778) (0.083)

CSR as strategy 0.396 *** 0.443 *** 0.264 ** 0.103 0.082 ** -0.584 0.125 * (0.118) (0.140) (0.130) (0.136) (0.037) (0.601) (0.064)

Ln size -0.043 0.053 -0.028 0.101 * -0.002 0.000 -0.025 (0.049) (0.058) (0.054) (0.056) (0.015) (0.252) (0.026)

Ln (capital intensity) 0.218 *** 0.175 ** 0.182 *** 0.163 ** 0.068 *** -0.212 0.046 (0.057) (0.068) (0.063) (0.066) (0.017) (0.279) (0.030)

Market competition 0.076 0.028 0.117 0.168 -0.011 0.884 0.094 (0.124) (0.148) (0.138) (0.144) (0.039) (0.632) (0.067)

Export intensity -0.002 -0.001 -0.002 -0.001 0.001 0.007 0.002 * (0.002) (0.003) (0.002) (0.003) (0.001) (0.012) (0.001)

Market share 0.047 -0.004 0.019 0.062 * 0.021 ** -0.167 0.032 * (0.033) (0.039) (0.036) (0.038) (0.010) (0.169) (0.018)

Privatized 0.244 -0.065 0.288 0.271 0.062 -0.593 0.044 (0.163) (0.191) (0.178) (0.188) (0.052) (0.838) (0.090)

External auditing 0.433 *** 0.264 0.090 0.297 * 0.065 -0.607 0.094 (0.146) (0.175) (0.160) (0.170) (0.045) (0.739) (0.079)

Profit rate -0.495 0.065 -0.037 -0.049 0.142 -2.238 0.990 *** (0.505) (0.592) (0.558) (0.575) (0.159) (2.606) (0.274)

DPEs -0.154 -0.543 ** -0.364 * -0.125 0.008 1.299 -0.109 (0.187) (0.220) (0.209) (0.214) (0.059) (0.962) (0.103)

HMTs -0.029 -0.527 -0.470 0.083 0.028 2.306 -0.247 (0.289) (0.342) (0.319) (0.335) (0.093) (1.503) (0.159)

FIEs 0.064 -0.053 0.052 0.346 0.078 -0.734 -0.268 ** (0.240) (0.281) (0.267) (0.275) (0.076) (1.239) (0.132)

F for industry dummies 1.84 0.69 2.43 * 2.61 * 2.21 * 4.31 *** 2.52 * F for city dummies 7.86 *** 8.84 *** 3.39 *** 9.35 *** 4.81 *** 2.04 ** 1.23 Number of obs. 566 530 546 547 578 576 569 R-squared 0.392 0.383 0.253 0.420 0.258 0.199 0.179 F 10.377 *** 9.344 *** 5.251 *** 11.264 *** 5.721 *** 4.070 *** 3.532 *** Note: SE in parenthesis; constants are not reported; ***, p < .01, ** p < .05, *, p < .10. DPEs = Domestic Private Enterprise; HMTs = Hong-Kong, Macao, and Taiwan invested Enterprises; FIEs = Foreign Invested Enterprises.

Table 6 Union voice activities and voluntary benefits

Medical insur. (local) Medical insur. (migrant) Collective wage contract 0.399 ** 0.297 * (0.170) (0.159)

Being consulted in labor disputes 0.087 0.090

(0.159) (0.150)

Participation 0.004 0.120

(0.162) (0.154)

Employee education 0.266 ** 0.247 ** (0.107) (0.101)

Ln tenure 0.080 0.062

(0.114) (0.107)

Migrant workers 0.126 0.187 **

(0.088) (0.083)

Law compliance 0.253 0.156

(0.209) (0.196)

CSR as strategy 0.118 0.170

(0.165) (0.156)

Ln size 0.043 0.084

(0.069) (0.065)

Ln (capital intensity) -0.004 0.011

(0.081) (0.076)

Market competition 0.196 0.194

(0.177) (0.166)

Export intensity -0.007 ** -0.005

(0.003) (0.003)

Market share -0.071 -0.032

(0.046) (0.043)

Privatized -0.048 -0.095

(0.231) (0.216)

External auditing 0.313 0.131

(0.208) (0.196)

Profit rate -0.175 -0.084

(0.759) (0.724)

DPEs 0.084 0.146

(0.270) (0.259)

HMTs 0.848 ** 0.504

(0.412) (0.398)

FIEs 0.449 0.480

(0.350) (0.332)

F for industry dummies 0.93 1.25

F for city dummies 1.98 ** 1.85 ** Number of obs. 479 471

R-squared 0.164 0.173

F 2.646 *** 2.772 *** Note: SE in parenthesis; constants are not reported; ***, p < .01, ** p < .05, *, p < .10. DPEs = Domestic Private Enterprise; HMTs = Hong-Kong, Macao, and Taiwan invested Enterprises; FIEs = Foreign Invested Enterprises

Table 7 Union voice activities and firm performance

Productivity Profitability Productivity change Profitability change Collective wage contract 0.116 -0.011 0.090 * -0.112 (0.072) (0.087) (0.048) (0.077)

Being consulted in labor disputes 0.027 0.080 -0.075 * 0.049 (0.068) (0.081) (0.044) (0.072)

Participation -0.156 ** -0.180 ** -0.029 -0.131 * (0.069) (0.083) (0.046) (0.073)

Employee education 0.137 *** 0.116 ** 0.032 0.076 (0.046) (0.055) (0.030) (0.047)

Ln tenure -0.190 *** -0.029 -0.103 *** 0.024 (0.049) (0.058) (0.034) (0.054)

Migrant workers -0.078 ** -0.091 ** -0.036 -0.019 (0.034) (0.041) (0.023) (0.037)

Law compliance 0.015 0.167 -0.044 0.127 (0.092) (0.110) (0.062) (0.100)

CSR as strategy 0.072 0.196 ** 0.088 * 0.167 ** (0.071) (0.085) (0.047) (0.075)

Ln size -0.105 *** -0.067 * -0.065 *** -0.056 * (0.029) (0.035) (0.020) (0.031)

Ln (capital intensity) 0.361 *** -0.302 *** 0.085 *** -0.233 *** (0.033) (0.040) (0.024) (0.036)

Market competition 0.031 0.080 0.011 0.065 (0.074) (0.089) (0.049) (0.079)

Export intensity -0.004 *** -0.002 -0.002 ** -0.002 (0.001) (0.002) (0.001) (0.001)

Market share 0.042 ** 0.065 *** 0.025 * 0.036 * (0.020) (0.024) (0.013) (0.021)

Privatized -0.132 -0.094 0.033 -0.187 * (0.099) (0.119) (0.066) (0.106)

External auditing 0.046 -0.038 0.035 -0.110 (0.087) (0.105) (0.060) (0.096)

DPEs 0.417 *** 0.289 ** 0.112 0.186 (0.113) (0.136) (0.075) (0.120)

HMTs 0.318 * 0.215 0.091 0.144 (0.175) (0.210) (0.113) (0.182)

FIEs 0.461 *** 0.178 0.100 0.038 (0.145) (0.174) (0.095) (0.153)

Productivity (2004) 0.730 ***

(0.028)

Profitability (2004) 0.380 ***

(0.035)

F for industry dummies 0.40 1.41 1.28 1.36 F for city dummies 8.98 *** 3.42 *** 5.34 *** 2.59 *** Number of obs. 579 579 523 523 R-squared 0.447 0.216 0.780 0.371 F 13.796 *** 4.693 *** 52.441 *** 8.758 *** Note: SE in parenthesis; constants are not reported; ***, p < .01, ** p < .05, *, p < .10.

DPEs = Domestic Private Enterprise; HMTs = Hong-Kong, Macao, and Taiwan invested Enterprises; FIEs = Foreign Invested Enterprises.

Table 8 Results summary for union voice activities and outcomes

Collective wage contract Being consulted in labor disputes Participation Ln hourly wage * *- Ln monthly wage * ***- Ln yearly wage Pension cov. Mand. Medical insur. Work-related injury insur. * Unemployment insur. Ind. labor contract cov. *** * ** Illegal overtime Training density *** Vol. medical insur.(local employees) ** Vol. medical insur. (migrant workers) * Productivity ** - Profitability **- Productivity change * * - Profitability change * -

Note: ***, p < 0.01, ** p < 0.05, * p < 0.1. “-” means significant and negative.

Table 9 Results summary for union status and outcomes

Com paring to union - free firms Union status Comparing Union Dependent Variables Non-voice union (a) Union with a voice face (b) a and b dummy Ln hourly wage Ln monthly wage Ln yearly wage Pension ** *** *** Mandatory medical insur. Work-related injury insur. Unemployment insur. ** *** *** Ind. labor contract coverage *** *** *** Illegal overtime *- Training density ** Vol. medical insur.(local employees) ** ** Vol. medical insur. (migrant workers) * Productivity *- *- Profitability *- **- **- Productivity change Profitability change Note: ***, p < 0.01, ** p < 0.05, * p < 0.1. “-” means significant and negative.

Table 10 Results summary of domestic private enterprises (N = 809)

Within unionized firms Comparing to union-free firms

Being Collective Union status consulted in wage Non-voice Union with a Comparing Union Dependent Variables labor disputes Participation contract union(a) voice face (b) a and b dummy Ln hourly wage * ns ns Ln monthly wage **- * Ln yearly wage Pension *** *** *** Mandatory medical insur. Work-related injury insur. * * Unemployment insur. ** *** *** Ind. labor contract coverage ** * *** *** ** *** Illegal overtime **- *- *- Training density * *** *- *** Vol. medical insur.(local) *** ** ** Vol. medical insur. (migrant) *** * Productivity **- ns ns Profitability ***- ns ns *- Productivity change Ns ns Profitability change **- Note: ***, p < 0.01, ** p < 0.05, * p < 0.1; “-” means significant and negative; ns means non-significant; underlined stars or ns indicate difference from the whole sample.

Table 11 Results summary of manufacturing firms (N = 562)

Within unionized firms Comparing to union-free firms Being Collective Union status consulted in wage Non-voice Union with a Comparing Union Dependent Variables labor disputes Participation contract union(a) voice face (b) a and b dummy Ln hourly wage ns ns Ln monthly wage ns ns Ln yearly wage Pension ns ** ** Mandatory medical insur. Work-related injury insur. ** * ** Unemployment insur. * *** *** Ind. labor contract coverage ns *** ns *** ** *** Illegal overtime ns Training density *** ns ** ** ** Vol. medical insur.(local) ns ns ns Vol. medical insur. (migrant) ns ns Productivity ns ns ns Profitability ns ns ns ns Productivity change *- ns Profitability change ns Note: ***, p < 0.01, ** p < 0.05, * p < 0.1; “-” means significant and negative; ns means non-significant; underlined stars or ns indicate difference from the whole sample.