The role of communist party branch in employment protection: evidence from Chinese private firms

ABSTRACT

Using the survey data from Chinese private firms, this study investigates how the ruling Party affects firms’ treatment to their employees. We document a significant positive relationship between Party branch and employment protection. Specifically, firms with Party branch are more likely to sign labor contracts and provide stable jobs to their employees. Moreover, this effect is more prominent in regions with higher unemployment rate and in firms with labor union. Our findings highlight the Communist Party branch as an important communication bridge between the government and firms, which transfers public governance goals to firms, and then promotes employee-friendly practices.

KEYWORDS:

• Communist Party branch
• employment protection
• labor union
• unemployment rate
• Chinese private firms

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. . Many emerging internet companies in China, such as Millet, Jingdong, Baidu, Alibaba, etc., have established Party branches in succession. For example, Jingdong has established 154 Communist Party branches, furthermore, it has specially set up the quality management system to improve management effectiveness of Party branch.

2. The final sample is comprised of 828 firm observations in 2006, 869 firm observations in 2008, 1875 firm observations in 2010, 1985 firm observations in 2012 and 1098 firm observations in 2014.

3. Collective contract is signed between the employee group and firm, which mainly focuses on the basic rights and interests of employees, such as labor safety, vacation, and working hours; while individual contract is signed between individual worker and firm, which covers more specific rights and interests, such as labor compensation, social insurance and housing fund, etc. The two types of labor contracts provide legal support to protect employees’ rights and interests from different perspectives. Actually, two types of contracts are coexisting in Chinese private firms, and it is common for employees to sign both types of contracts with firms at the same time.

4. ‘How many employees are employed throughout the year in your firm?’, ‘How many employees are employed for more than half a year and less than one year?’ and ‘How many people are hired temporarily for less than half a year?’, corresponding to three types of employment term structure: long-term employment (year-round), short-term employment (six months to a year) and temporary employment (less than six months).

5. The eastern regions of China include 12 provinces, including Liaoning, Beijing, Tianjin, Hebei, Shandong, Jiangsu, Shanghai, Zhejiang, Fujian, Guangdong, Guangxi and Hainan; the central regions include 9 provinces, including Shanxi, Inner Mongolia, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan; the western regions include 9 provinces, including Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Sichuan, Chongqing, Yunnan, Guizhou and Tibet.

6. In the subsample of ‘high unemployment rate group’, the number of firms with Party branch is 1306, accounting for 36.22%; while in the subsample of ‘low unemployment rate group’, the number of firms with Party branch is 1263, accounting for 41.42%.

7. When we use the average of provincial unemployment rate to divide two subsamples and conduct regression analysis, respectively. The empirical results are similar to the above.

8. In the subsample with labor union (UNION=1), the number of firms with Party branch is 2312, accounting for 63.27%; while in the subsample without labor union (UNION=0), the number of firms with Party branch is 257, accounting for 8.56%.

9. When calculating the Party branch intensity of the province where firm i is located, we exclude firm i itself to reduce the possible source of endogeneity or self-selection.

10. We classify the workers with long-term (year-round) as full-time workers, and part-time workers otherwise (Dong, Luo, and Wei 2016). Then, we use the number of full-time workers divided by the number of part-time workers to measure FULL/PART.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China (71972017, 71572019, 71802169); the Philosophy and Social Sciences Research of Ministry of Education of China (18JHQ079); the Key Project of Philosophy and Social Sciences Research of Chongqing Municipal Education Commission (19SKZDZX11); and the Graduate Scientific Research and Innovation Foundation of Chongqing (CYB20049, CYS20051);