Pressure on China’s labour market showed signs of easing, according to the 2016 Hays Global Skills Index released today which assesses the efficiency of skilled labour markets in 33 countries.
The latest Index data suggests risks of a severe slowdown in Chinese GDP growth have abated, as better exports and steady infrastructure investment offset downward pressures from increasingly weak corporate investment.
The 2016 Hays Global Skills Index, produced in collaboration with Oxford Economics, ranks China 31 on the list of 33 countries, with an overall score of 4.3, down from 4.7 last year, indicating strong labour market performance. Seven indicators, or points of potential pressure, make up the ranking and each received a score out of 10. A score close to 0 indicates little to no pressure, while a score close to 10 shows severe pressure.
“Easing pressures in China are due to a complex result of slower economic growth, higher labour market participation rates and reducing wage pressure,” says Simon Lance, Managing Director of Hays in China.
The Index shows that in China, pressure on our labour market mainly comes from the indicator ‘labour market flexibility’, which measures the legal and regulatory environment faced by businesses and for which China scored 8.1. There are still many barriers in China restricting the local labour market.
The biggest change from last year is the dramatic decline in ‘overall wage pressure’ which fell sharply from a score of 7.5 to 5.5 this year, showing that wages are not rising as quickly as rates seen in the past. Labour market participation also fell by 0.9 suggesting labour supply has improved.
“This reflects what we’re seeing on the ground, where employers in softening industries such as traditional manufacturing and industrial sectors are facing talent challenges in a climate of tight cost control,” says Simon.
The Hays Global Skills Index ranked China fairly positively for the remaining indicators. Our education system is very well equipped to meet future talent needs (scored1.2 for ‘education flexibility’). Labour market participation is fairly flexible (scored 1.9 for ‘labour market participation’) and candidates usually possess the skills employers are looking for (scored 4.6 for ‘talent mismatch’). These are all positives for our labour market since they indicate low pressure points.
Interestingly, while the ‘overall wage pressure’ score eased this year, China received scores of 3.7 for ‘wage pressure in high-skill industries’ and a score of 5.0 for ‘wage pressure in high-skill occupations’. As Simon explains, “Recruitment is driven by the need to increase productivity, with employers focused on boosting and up-skilling their leadership and technical teams to navigate economic conditions. In high-skill industries, there is still an ongoing skills shortage in the high tech industrial, internet, e-commerce, and lifestyle services sectors.”
“To tackle their talent challenges, employers need to have a strong industry-specific recruitment strategy in place, integrating their Employee Value Proposition (EVP) throughout the employee lifecycle,” advises Simon.
About the Hays Global Skills Index
The Hays Global Skills Index assesses the efficiency of the skilled labour market in 33countries, 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 pressure 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 www.hays-index.com
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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Hays plc (the "Group") is a leading global professional recruiting group. The Group is the expert at recruiting qualified, professional and skilled people worldwide, being the market leader in the UK and Asia Pacific and one of the market leaders in Continental Europe and Latin America. The Group operates across the private and public sectors, dealing in permanent positions, contract roles and temporary assignments. As at 30 June 2016 the Group employed 9,214 staff operating from 252 offices in 33 countries across 20 specialisms. For the year ended 30 June 2016:
– the Group reported net fees of £810.3 million and operating profit (pre-exceptional items) of £181 million;
– the Group placed around 67,000 candidates into permanent jobs and around 220,000 people into temporary assignments;
– 22% of Group net fees were generated in Asia Pacific, 45% in Continental Europe & RoW (CERoW) and 33% in the United Kingdom & Ireland;
– the temporary placement business represented 58% of net fees and the permanent placement business represented 42% of net fees;
– 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.