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China’s overall wage pressure a threat to its global competitiveness, finds a global index of 31 countries


Updated: 14 Apr 2016

China has received a high score of 8.4 for overall wage pressure in the 2014 Hays Global Skills Index, showing that wages are increasing above historic levels and threatening our standing as a global manufacturing power.


The Hays Global Skills Index, produced in collaboration with Oxford Economics, ranks China 12th on the list of 31 countries overall for efficiency of the skilled labour market (Hong Kong was ranked 5th). But a deeper dive into the findings shows that China’s employers face a tight labour market, particularly for highly-skilled professionals. 


Seven indicators make up the Hays Global Skills Index and each received a score out of 10. Of particular note for China is the score of 8.4 for overall wage pressure, which is second only to Hong Kong (on 10.0) in the rankings of the 31 countries included in the Index. This shows that real wages in China are increasing much quicker than the longer term trend. 


According to recruiting experts Hays, as China experiences overall wage pressure it looses its competitive edge in labour intensive industries, causing investors to consider other lower cost Asian options.


“Internationally, China has a reputation for a stable workforce that is willing to work hard and go beyond expectations,” says Simon Lance, Regional Director of Hays in China. “But while this has been a huge advantage in the global world of work in the past, wages in China are now increasing much quicker than we’ve historically seen, which lessens this benefit. This is most notable in the manufacturing industry, with more manufacturing moving to south Asia.


“Rising wage pressure also suggests that China is on the verge of an exceedingly tight labour market as employers compete for talent based on salary,” he said.


China also received a high score of 8.0 for labour market flexibility, second only to Brazil on 9.3, suggesting that there are barriers restricting the labour market. If labour market legislation was to become more flexible, such as by welcoming more talented people from abroad, it could ease the skills shortage.


Also of interest is China’s score of 5.6 for talent mismatch, which shows that the skills employers looks for are not always available in the labour market.


At the other end of the scale, China received a very low pressure score of 1.3 for education flexibility, since our education system is well-equipped to meet labour market needs. Only Singapore (0.8) and India (0.3) scored lower, while Hong Kong was scored 1.7 and Japan 2.8. This makes Asia’s educational performance the best in the Hays Global Skills Index. 


China also received a low pressure score of 2.9 for labour market participation, which tells us that there is a large pool of untapped workers. Given that China will soon begin to feel the economic effects of its one child policy in the form of a declining talent pool, encouraging more people of working age into the workforce will help ease the skills shortage.


Commenting on the overall jobs market, Simon says: “We’re seeing an active jobs market, which is fuelling staffing demand. This is most notable in tier 1 cities and east coast areas. The needs of emerging industries such as hi-tech, internet, e-commerce, financial service and FMCG are also adding to vacancy activity.


“But as our Index shows, one of the two biggest pressure points for China is the localisation of the workforce (as indicated by the high score for labour market flexibility), which is reducing the talent pool. With local knowledge and cultural understanding just as important as expertise, expatriates cannot fill talent gaps at the rate we once saw. The other pressure point is of course overall wage pressure.


“Together, these show that China’s employers are facing a shortage of highly-skilled professionals.  As a result, there is a need to look at more innovative strategies to attract and retain top talent.”


About the Hays Global Skills Index

The Hays Global Skills Index assesses the efficiency of the skilled labour market in 31 countries, or its ability to supply skilled labour.  It is a composite figure based on seven indicators, each with their own score. 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.


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 Hays Global Skills Index can be viewed at


In China Hays operates from four local offices: Shanghai, Beijing, Suzhou and Guangzhou.


Hays, the world’s leading recruiting experts in qualified, professional and skilled people.


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About Hays

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. As at 30 June 2014 the Group employed 8,237 staff operating from 237 offices in 33 countries across 20 specialisms. For the year ended 30 June 2014, Hays placed around 57,000 candidates into permanent jobs and around 212,000 people into temporary assignments. 24% of Group net fees were generated in Asia Pacific.


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.