An Empirical Study Of Differentials In Labor Relations Between State-Owned Enterprises And Private Enterprises

Labor relations is closely related to each employee. It deeply affects the economic benefits of workers and their families, and it also affects a country’s economic development and social stability. The differences of labor endowments and the nature of jobs will inevitably result in a wide range of differences in wage rate and non-wage benefits, working hours, training and participation in trade unions. Even if the characteristics of human capital or labor productivity have been controlled, there are still some wage differentials that cannot be explained. Because of discrimination and other unpredictable factors, different groups having the similar labor productivity face differences in employment opportunities, career development and salary. Research on this irrational differences in labor relations helps us to observe the fairness and competition in China’s labor market. Using the first-hand survey data and CHNS data, the paper analyzes the difference in labor relations between state-owned enterprises and private enterprises from seven dimensions. More specifically, they include not only the wage rate but also hours of work, labor contracts, social insurance, training, trade union, labor disputes and employee satisfaction.Survey data shows that there are obvious differences in labor relations between state-owned enterprises and private enterprises. Employees in state-owned enterprises have less working hours every week, higher rate of labor contract, pension insurance and medical insurance. Besides, employees have more opportunities to receive training and more likely to be protected by trade unions. In a word, labor relations in state-owned enterprises is far superior to private sector. The factors of huji differentials and education are the most relevant to employment and social benefits. They have a common impact on rate of labor contracts and social insurance. Decomposition of wage differentials between state-owned enterprises and private enterprises reflects that the advantage of human capital and labor productivity account for 52 percent of wage differentials, which is reasonable. However, there are still 48 percent caused by non-market factors of the total differentials. The nearly half unexplained proportion is unreasonable, which indicates the segmentation in labor market. Therefore, the corresponding solution to narrow the unreasonable differences in labor relations between enterprises is to break the relations between huji and social welfare and public service, to improve the levels of human capital through education and training, in order to improve workers’ bargaining power and reduce differences in labor relations between different groups.