With the increasingly rapid development and intensive competition of business, both employers and employees are confronted with uncertainty which has different implications for the two sides. One of the uncertainty facing employees is job insecurity. A survey of Chinese human resources service provider-- “51-job"-- reported that 67% people experienced some extent of job insecurity. Perceived job insecurity has become a common psychological distress among employees in China.

A large number of empirical studies in Western societies showed that job insecurity negatively affects employee attitude and behavior, and then will undermine employee performance and organizational performance. Researchers also tried to explore the antecedents of job insecurity, which mainly concentrated on the personal characteristics, employment contract type, human resource practices, and organization changes. Research findings are not in congruence. Studies based on Western sample show that the stability of the employment type will affect the employee's job insecurity experience (Rosenblatt &Ruvio,2004). Temporary employees is more uncertain about future work(e.g. Klein Hesselink and van Vuuren, 1999; Letourneux,1998;Sverke et al.,2000;Vandoorne and De Witte,2002). The empirical study of Witte De and Naswall (2003) further confirmed that the level of temporary employees' insecurity was significantly higher than that of permanent employees. Up to date, few studies examined the antecedents of job insecurity in Chinese setting.

Given the different employment system in China, it would be worthwhile to explore the relationship between different employment type and job insecurity of employees. Based on the current situation, we divide employment type into two categories: formal contracted workers and labor dispatch workers.

Research has demonstrated differences between dispatched workers and formal contracted workers in organizational commitment, job satisfaction, social support, and well-being in Chinese organizations (Song, 2011; Xie, 2006).

We take a perspective of psychological contract (Li & Guo, 2005; Li & Sun, 2008; Rousseau, 1995, 2002) in explaining the relationship between employment type and job insecurity and the mediating effect of psychological contract.

Data were collected with questionnaire survey from companies in manufacturing industry and a variety of geographical locations including Beijing, Shanghai, Jinan, Nanjing. 415 employees of two types of employment voluntarily participated in this survey and 375 responded, among which 301 were valid and used for the data analysis (statistics showed no difference between those remained and those dropped). All the measures used in this study are standardized and validated with Chinese sample. Correlation analysis and mediation test with bootstrap were conducted. Results demonstrated that:

1.There is no significant difference between the dispatch employees (n=141) and the formal contract workers (n=160) in job insecurity;

2. Significant differences are found in the level of psychological contract between the dispatch employee and the formal contract workers in a way that organizational responsibility and employee responsibility of labor dispatch employees are significantly lower than the formal contract workers;

3. Psychological contract has a significant negative correlation with job insecurity;

4. Psychological contract mediates the relation between the type of employment contract and the job insecurity

Both theoretical and practical implications of this study are explained in the lens of psychological contract and human resource management practices. Limitations and future directions are discussed.