Converging divergence: the effect of China’s Employment Contract Law on signing written employment contracts

Abstract

This article explores: (1) whether the 2008 Employment Contract Law (ECL) (or Labor Contract Law) has increased the likelihood of employees having written employment contracts; (2) whether that law has produced a significant convergence effect relative to pre-existing patterns of diversity in signing rates between urban and migrant employees, more and less educated employees, employees in different types of enterprises and in more or less economically developed regions. We used data from the Sixth and Seventh Surveys of Chinese employees, covering approximately 80,000 individuals, undertaken in 2007 and 2012, just prior to and after the enforcement of the new ECL. The results demonstrate the effect of ‘converging divergence’. Convergence is evident in that this law has significantly increased the likelihood of employees signing employment contracts. Notably, the ‘signing gap’ between employees of state-owned enterprises and of privately owned enterprises has narrowed as has that between less and more educated employees. Divergence and disparity remain in that gaps in the likelihood of employees signing employment contracts persist among employees at different educational levels and in different enterprise ownership types or different provinces, even when the hukou identity gap is enlarged.

Keywords:

• convergence and divergence
• Employment Contract Law (or Labor Contract Law)
• HRM in China
• institutional theory
• written employment contract

Acknowledgments

The findings, interpretations and conclusions expressed in this article are entirely those of the authors. We would like to thank Professor James Jian Min Sun and Shiyong Xu for many useful comments and suggestions on this article. We are grateful to the data supplied by the ACFTU.