Study On The Operation Mechanism And Implementation Effect Of Collective Wage Consultation System

The objective of collective wage consultation system is to enhance the welfare and status of workers, but there are full of controversies. This paper attempts to in-depth analyze its operation mechanism, and evaluate its implementation effect in order to provide reference for improving the effectiveness of collective wage consultation system.Essentially, collective wage consultation system is a game for benefit between employers and employees. This paper argues that efficient operating of the system builds on some appropriate conditions, which mainly lay in boundary field and operation field. The former is related to heterogeneous characteristic of objects of system, which determines the possibility of effective operation of the system; and the latter is related to the change of relative collective bargaining power of the labors'organization, which determines the degree of realization of the system efficiency. Therefore, from the two fileds and based on unique feature of collective wage consultation system in China which contains four paticipaints of employee, labor union, employer and the government, this paper from four respects of labors' heterogeneity, institutional arrangement, labor union behaviour and government intervention, analys the mechanism that labors and employers who are under some constraints interact with each other and determine the equilibrium solution of collective bargaining. Especially, the paper uses the collective action theory and government behavior theory from the school of public choice to mainly discuss two problems which are the constraint of labor heterogeneity on endogenous boundary of the system (problem1), and the effect of government intervention on operating efficiency of the system (problem2).As to the effect evaluation, this paper has done three positive analysis based on the enterprise-employee matched micro data:first of all, examines the general impact on the wage of collective wage consultation system by using mean regression and quantile regression, and meanwhile analysis the heterogeneity of wage effect. The work is the verification of probleml; secondly, analyzes the impact on the nonwage welfare of this system by using Probit model, and examines whether the system will produce that nonwage welfare effect substitutes for wage effect; thirdly, investigates the impact on the scale of employment, and discusses the heterogeneity across different enterprises, this section will provide some evidence for problem2.The conclusions drawn by this paper are as follow:Firstly, collective wage consultation system has endogenous boundary. Necessary prerequisites for the effective operation of the system are paticipaints should have two characteristics:first, there is a common interest demands; and second, marginal revenue of paticipaints from their collective action should be greater than marginal cost. So when there is no perfect incentive mechanism or mandatory constraint, only in labor groups who have high homogeneity and strong substitutability between each other, and labor-intensive areas could the collective wage consultation system achieve its targets.Secondly, based on boundary condition, the degree of realization of the target that collective wage consultation system promot the welfare of workers depends largely on the bargaining power between the labor and capital, which are related to relevant institutional arrangements, and behavior of labor unions and government in collective wage consultation. Intervention behavior of local governments is a typical characteristic of Chinese collective consultation system. Intervention behavior is detennind by the officials judging and weighing "double goals" that are to enhance stability of the regime and to improve their performance in term of their self-interest motivation. When the former goal dominates, the officials will make to enhance the bargaining power of the workers in order to win their support as many as possible which will bring out a high wage. Conversely, they will prefer encourage the bargaining power of employers which is likely to generate a low efficiency bargaining equilibrium with lower wage and more labor employment.Thirdly, the role of collective wage consultation system in improving the wage of grass-roots employee is not optimal, and the wage effect is related to the employee heterogeneity. There is a larger or more significant negative effect among those employees located in higher quantile of income distribution, with stronger original labor ability, with higher human capital, or with professional skills. This result supplys empirical evidence for efficient operating of this system need meet boundary condition first.Fourthly, the implementation of collective wage consultation system improves the nonwage welfare of grass-roots employees, which implys that it plays some positive role in enhancing labor right protection of grass-roots employees. At the same time, it maybe indicates that employers try to use nonwage welfare to induce employees to make a compromise on bargaining wage during the collective bargaining. Moreover, this positive effect mainly exist the nonwage welfares which belong to lower levels or occupying relative low cost of enterprise.Fifthly, Collective wage consultation system has a robust positive effect on expanding employment scale, which means in the background that the labor force is excess in totall but shortage in local, it benefits to increase employment. But in view of its wage effect, the system expands employment scale at the expense of employees'some wage welfare. According to the mechanism analysis of the system, this is because local officials'intervention behavior more favours employer under the press of improving government performance. However, positive effect of expanding employment scale is mainly concentrated in the enterprises where "weak capital and weak labor" are matched.The policy implications of this paper are:the implementation of collective wage consultation system should fully respect human heterogeneity, reasonably definite of the scope of this system; we need to constantly strengthen labor negotiators'bargaining ability; in the circumstance of strong capital and weak labor, we must clearly definite the right limits and patterns of government intervention in collective bargaining between employers and employees, and make it enhancing employees' bargaining power without reducing the original efficiency of collective bargaining.