The Effect Of Labor Relations Adjustment On Employment: Focusing On Wages And Working Hours

Employment is the root of people's livelihood. With the largest population in the world,the employment issue is a very important problem in China's social economicdevelopment.Most of the relative research showed that employment flexibility is continuingdecline since1990's. Some scholars have looked to technological advance and economicrestructuring explanations for the problem. Nevertheless, we believe the unjustifiable laborrelation in non-agricultural industry is a big cause of lack employability in China. So we aredevoted to investigating the effect of adjusting labor relation on job growth.To achieve this one goal, this dissertation mainly discusses the content of these aspects.First, we summary the development course of labor relation in China. In this part, weintroduce the different stages of China's labor relation, and then expound the labor legislation,working-hour system and actual working hours, wage increasing and causation, and so on.Second, taking wages and working hours as the example, we discuss the effects of laborrelation adjusting on employment. Specifically, we explore labor demand in classic theory therelation about wages and employment. Then, the article analyzes the problem by introducingthe "flexibility of labor demand". In addition, it renews and improves the traditional theorycombined with real life. On that basis, this paper applies VAR model and variancedecomposition to study the relationship between wages and employment. As for the relationbetween working hours and employment, we introduce the concept of "Quasi-fixed Cost" asthe tool to make further analysis. On the side, based on a set of panel data from2003to2009,we explore the impacts of working hours on employment. Third, we review the evolvement ofWest's labor relation, and then analyze the working-hour system and actual working hours,wage increasing, labor legislation and mechanisms of collective consultation. Finally, we putforward some suggestions on adjustment of labor relation and promoting the process ofurbanization.The main results of this paper are included below:(1) The labor relation of the West went through a process from confrontation- compromise-confrontation and compromise, from unbalance to relative balance in the last200years. The actual working hours have gradually declined with the standard working hoursin different countries. Industrialization is one of main factors of wages increasing, and theyhave good consistency. The West has established the set of perfect legal system of labor fortwo hundred years. The mechanism of collective consultation, which began to take shapeform1920s, has already become the main pattern of labor relation adjustment.(2)The labor relation has rapidly unbalanced, which becomes the cause of socialconflicts since reform and opening on China's transition from plan to market. China hasestablished the primary legal adjustment system of labor relationship. Work overtime is acommon phenomenon in the China. Nonetheless, there are notable differences across groupsin working hours. The wages of workers has improvement by a large margin since1978.However the wage forming mechanism needs further improvement.(3) The traditional ideas consider that employment move inversely to wages bysubstitution effect and scale effect. But, we think that relationship between wages andemployment is more complex in the real economy. Both have the impulse of initiative growthwhen the growth rate of labor demand is greater than labor supply. In addition, wageincreasing will boost the demand for products by income effect, thereby creating more labordemand. By the VAR Model, the results show that there is a steady equilibrium relationshipbetween wages and employment in the long run. In the short term, wage increasing hasnegative effect on job growth. Nevertheless, wage increasing has positive effect on job growthand the influence has continually increased as time went by.(4) As working hours and employment are production factors that can replace each other,reduce working hours is beneficial to job growth. Whereas because of the Quasi-fixed Cost,can to some extent weakened the effect of shortening hours on job growth. The result showsthat the change of working hours has less influencing degrees to employment in China byGMM of dynamic panel model. The cost of lengthening the working time is lower than maybe the cause of the increase in the number of employment.(5)The adjustment of labor relation has positive effect on employment under certaincondition. Therefore the main idea is: guarantee the workers' rights and interests effectively,raise the cost of breaking the law; reduce the Quasi-fixed Cost of job creation. To reach thisgoal, the Chinese government should enact a series of relevant policy measure and stick withit.