Abstract
This paper examines the employment relations (ER) system in Hong Kong from 1997 for a period of nearly 20 years, supported by firm-level case studies on employment practices in two multinational banks operated in Hong Kong. The research question asked is why has there been little change to the decentralised ER system in Hong Kong despite the fact that Hong Kong has experienced significant political change and great economic turmoil after 1997. The Varieties of Capitalism (VoC) approach is used as the theoretical framework to examine the Hong Kong employment relations system. It is found that while political and economic changes impacting on Hong Kong since 1997 are certainly significant, the decentralized employment relations system in Hong Kong has remained rather intact over the years. Policymakers perceive the benefits brought about by such decentralised system to sustain Hong Kong’s comparative advantage. They are therefore quick to take action to overcome challenges put up by trade unionists and workers at some points threatening the continued operation of the decentralized system. Policymakers’ action is very much supported by employers who are happy to strengthen managerial prerogative and implement flexible employment practices in support of corporate strategies chosen to sustain competitive advantage of their firms operating in highly complex, turbulent and unpredictable contexts. The VoC framework is found to be useful in answering the research question as examined. However, the paper highlights the need not to treat employers and employees in any economies as only actors passively responding to institutional demands. Also more attention should be given to the outcomes of political struggles between policymakers and employers and trade unionists and workers, and the role of multinational corporations in shaping institutional changes over time.