Rapid achievements in education and higher rates of labour market participation have created a more balanced and active labour market in China, but labour market flexibility, overall wage pressure and a talent mismatch remain threats to the supply of the high-skills needed, according to the Hays Global Skills Index.
The Index assesses the efficiency of the skilled labour market, or its ability to supply skilled labour, in 30 countries. The Index scale ranges between 0 and 10, with the higher the Index score the greater the difficulty for employers in findings skills. A score greater than 5 indicates skill shortages; 5 or less indicates few if any signs of skills shortages.
The score of 5.0 for China suggest the market is balanced but incredibly active.
“China’s labour market is balanced but also very active with turnover an issue for employers, particularly around the one to two-year mark of employment,” says Simon Lance, Regional Director of Hays in China.
“Yet while China’s rapid achievements in education and high rates of labour market participation have brought more of the population into the growing economy and therefore created a more balanced labour market, upward pressures exist as well.
“These pressures are a threat to the stability of the labour market and are resulting in employers continuing to struggle to attract highly skilled and experienced professionals.
“It is a bitter paradox caused by employers being unable to find the skilled workers they need, particularly in more technical areas such as IT, construction and engineering,” he said.
The overall Index score is the average of seven indicator scores. Three indicators explore the supply of talent, namely education flexibility, labour market participation and labour market flexibility. One looks at talent mismatch. The final three are wage pressures indicators, looking at overall wage pressure, wage pressure in high-skill industries and wage pressure in high-skill occupations.
“Skills gaps can manifest themselves through wage pressures, a talent mismatch and/or supply,” says Simon. “Our Index looks at all three areas.
“Of concern in China are the scores for overall wage pressure, labour market flexibility and talent mismatch.
“China’s score of 6.0 for ‘talent mismatch’ indicates the numbers of both long-term unemployed and vacancies are increasing, suggesting the available labour does not have the skills employers want. This mismatch between the demand and supply for skills means employers’ expectations for skills and experience are not always being met by the available candidates.
“China’s ‘overall wage pressure’ score of 8.6 is very high and shows the country is expected to face overall wage pressures above historic norms. As a result we expect to see growth in wages across the whole economy, after allowing for inflation, particularly since Chinese companies are moving up the value chain and the country’s productivity is catching up to that of other countries. As a result, real wages will rise.
“In this environment, employers seeking to attract high-skill workers must be prepared to pay for it.
“The final area of concern is ‘labour market flexibility’, for which China scored 8.0. This indicator assesses the legal and regulatory environment faced by businesses. Inflexible labour market legislation constrains the ability of inward migrants to fill talent gaps.
“But by enhancing labour market flexibility, changes in employment policy could potentially have a more immediate effect than education related ones,” says Simon.
According to Hays, in China the top five skills in most demand are:
- Biology Director (Pharmaceutical R&D)
- Core Java Developer (Fixed Income System R&D)
- Corporate Banking Relationship Managers (MNC Banking)
- Geology Head (Oil Exploration)
- MEP Technical Director (Commercial / Industrial Construction)
About the Hays Global Skills Index
The Hays Global Skills Index is a composite figure based on seven components. A score of 5.0 indicates a balanced picture for labour markets, a score close to 0 indicates less intense competition for vacancies, and a score close to 10 shows severe difficulty in finding skills.
The seven components making up the Hays Global Skills Index are:
- education flexibility
- labour market participation
- labour market flexibility
- talent mismatch
- overall wage pressure
- wage pressure in high-skill industries
- wage pressure in high-skill occupations
The Hays Global Skills Index can be viewed at www.hays-index.com/2013
Hays, the world’s leading recruiting experts in qualified, professional and skilled people.
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Hays is the leading global specialist recruiting group. It is the expert at recruiting qualified, professional and skilled people worldwide.
Hays Specialist Recruitment (Shanghai) Co., Limited ("Hays China") operates across the public and private sector, dealing in permanent positions. Hays China’s eighteen specialisms span Accountancy & Finance, Banking, Architecture, Construction, Education, Engineering, Executive, Finance Technology, Human Resources, Hays Resource Management, Information Technology, Insurance, Life Sciences, Manufacturing & Operations, Oil & Gas, Property and Sales & Marketing.
Hays China operates four local offices in Shanghai, Beijing, Suzhou and Guangzhou. It is the local representative office for Hays plc, which is a global company with more than 7,840 staff operating from 239 offices in 33 countries across 20 specialisms.
Hays operates in the following countries: Australia, Austria, Belgium, Brazil, Canada, Colombia, Chile, China, the Czech Republic, Denmark, France, Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Portugal, Russia, Singapore, Spain, Sweden, Switzerland, UAE, the UK and the USA.