How does COVID-19 affect workplace employee relations in China? Evidence based on a survey of firms from Guangdong province
| Date | 15 February 2024 |
| Pages | 1024-1044 |
| DOI | https://doi.org/10.1108/ER-01-2023-0042 |
| Published date | 15 February 2024 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Zhongwei Sun,Xuchuang Zhang,Xiaofang Wu |
How does COVID-19 affect
workplace employee relations in
China? Evidence based on a survey
of firms from Guangdong province
Zhongwei Sun, Xuchuang Zhang and Xiaofang Wu
South China Normal University, Guangzhou, China
Abstract
Purpose –This study investigates the mediating role of wage and workforce adjustments, along with the
moderating influence of collective bargaining system and employees’localization, in elucidating the
relationship between the COVID-19 shock and workplace employee relations (ER) tension.
Design/methodology/approach –Survey data from 1,483 enterprises across 21 prefectural cities in China’s
Guangdong Province are collected. The hypotheses are tested by logistic regression.
Findings –The study reveals a positive correlation between the COVID-19 shock and workplace ER tension across
crisis-hit enterprises, irrespective of their size or industrial sector. Wage reduction and mass layoffs emerge as
significant mediators, while the collective bargaining system (CBS) and employees’localization act as moderators.
Research limitations/implications–The measurementof ER is limited ina single-item scale.Representation
of China is also limited since the study exclusively focuses on Guangdong province. The study offers some
contributions that firm-level data revealthe pathway throughwhich COVID-19 createsER tension.
Practical implications –On the one hand, the authors recommend the establishment of an effective
communication systembetween employersand employees.On the other hand,managers should considerthe role
of informalinstitutions.Furthermore,the authors suggestimplementingtailored strategiesat the enterpriselevel.
Social implications –Intense external shocks result in widespread layoffs and increased wage reductions
within workplaces, and under such circumstances, formal or informal institutions may be insufficient to
alleviate ER tension. In this case, the state authorities –including governments and other public agencies or
bodies –are necessary to intervene in to organize tripartite dialogue.
Originality/value –While numerous emerging studies on COVID-19 explore how different countries manage
industrial relations tension at the national level, few focus on ER at workplace level, particularly in developing
countries. Understanding how workplace ER evolve during external shocks and identifying institutional
measures to mitigate their negative impact is crucial for future crisis management.
Keywords COVID-19 shock, Employee relations (ER), Wage and workforce reduction, Mitigation strategies
Paper type Research paper
1. Introduction
Industrial relations (IR) or employee relations (ER) of an organization can have a great impact on
productivity and efficiency, and thus gains considerable attention in the scholarship. When
employees perceive a caring, kind, benevolent and respectful atmosphere, they develop a positive
evaluation of their organization and enhance their work commitment and efficiency
(Dastmalchian, 2008;De Prins et al., 2020). Conversely, heightened ER tension often leads to
reduced production and high rate of employee turnover (Hebdon, 2005). The quality of ER is not
solely dependent on the bipartite relationship between employers and employees; it can also be
influenced by the social and economic environment. Though COVID-19 no longer poses or a global
health crisis or an international economic threat, its effects on various aspects of human life persist.
ER
46,5
1024
This paper forms a part of the special section “China’s Labour Relations in a New Era of 2020s and
Beyond”, guest edited by Drs. Kan Wang and Dong Yan.
Funding: This research was funded by the National Social Science Fund of China (22BSH165) and
Guangdong Planning Office and Social Science (GD22ZDZSH01).
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 26 January 2023
Revised 29 June 2023
28 November 2023
16 January 2024
Accepted 19 January 2024
Employee Relations: The
International Journal
Vol. 46 No. 5, 2024
pp. 1024-1044
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-01-2023-0042
Among all aspects, the intricate and dynamic relationship between employers and
employees has undergone testing. Worldwide lockdown of businesses and industries, that
were implemented to curb the spread of the virus, caused many companies financial hardship
and operational difficulties. Consequently, reductions in pay and benefits, elimination of
redundant positions and layoffs were widely adopted by affected enterprises to save on
operational costs. However, such actions simultaneously triggered ER tension. According to
an ILO report (2021), 42% of non-judicial institutions reported increase in the volume of
individual labor cases, directly linked to the restrictions imposed during the pandemic and
the subsequent closure of enterprises, reduction in economic operations and dismissals (ILO,
2021a). Social partner organizations and state authorities thus increasingly engaged in
tripartite social dialogue to alleviate potential social unrest (Dobbins, 2020;ILO and OECD,
2020;Eurofound, 2021).
Majorityof these evidencesare based on the high-incomecountries, with scantdiscussion in
the developing world. This study, therefore, focuses on China, a developing country where
enterpriseswere particularlyadversely affectedduring the pandemic,since they had to comply
with government’s rigidcontrol measures and shutdown their operationsmore often. Workers
were thus at a high risk of jobloss or had to accept reduced working hours,extended leave or
furlough schemes. Moreover, China’s labor unions may failed to adequately protect workers’
rightsin the labor disputes,since they are often referredto as sham unions becausethey lack the
autonomyto effectivelyrepresent workers.The All-China Federationof Trade Unions(ACFTU)
is not independent of the government and the state (Howell and Pringle, 2019). Consequently,
workplace ER tension was more likely to be intensified in China during the pandemic.
Against this backdrop, this paper delves into the impact of the COVID-19 shock on
workplace ER in China. Three interrelated questions necessitate addressing: (1) Does the
COVID-19 shock affect workplace ER in China? If so, do all enterprises experience equal
impact? (2) What strategies do enterprises adopt in response to the COVID-19 shock ? And
how might these strategies influence ER? (3) Can the collective bargaining system(CBS) and
localization of workers help mitigate the adverse impact of COVID-19 on ER?
Our study contributessignificantly to the existing literature on COVID-19and employment
in three notable ways. First,while existing research primarily concentrates on the impactsof
COVID-19 on unemploymentand income, there is a distinct lack of investigation into ER in the
emerging literature. Second, numerous reports address policy responses to the pandemic
crisis at the national level,but few center on the workplace level. Third, in contrast to existing
ER literature that predominantly focuses on western countries largely due to lack of data in
those less-developed countries, this paper uniquely considers less-developed China.
2. Literature review
2.1 The impact of COVID-19 shock on Chinese labor market
The COVID-19 global pandemic triggered unemployment, job insecurity, business closures,
inflation and supply chain disruption, making ER a legitimate field of research (Hodder,
2020). In the first year of the pandemic, the number of global working hours lost was
approximately four times greater than during the global financial crisis in 2009. Besides, the
labor market’s recovery from the pandemic shock has recently stagnated. In the third quarter
of 2022, the total working hours are estimated to have remained 4.5% below the level attained
in the last quarter of 2019 (the pre-crisis benchmark), resulting in a deficit of 40 million full-
time jobs (ILO, 2021b). These broader shifts in the labor market landscape persist, bringing
terms such as “worker safety,”“job retention”and “effective ER”to the forefront of academic
and public interest (Hodder and Lucio, 2021).
In China, COVID-19 is perceived to have greater impact on labor market, when compared
to the SARS epidemic in 2003 and the global financial crisis of 2008. The first wave of effects
COVID-19 affect
workplace
employee
relations
1025
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