Recruiting in China

International hiring expectations have fallen across Asia from the previous quarter, but in China they are rising, the latest report from human resources firm Hudson said.

About 55 percent of respondents planned to increase their headcount in the third quarter, compared with 52 percent in the previous quarter, the report said.

But on a yearly basis the rate has dropped. In China, 60 percent of employers wanted to boost their headcount in the third quarter last year.

Employers in China still face the highest salary inflation in Asia, with only 8 percent of respondents saying they can negotiate lower wages for new managerial hires in the current economic climate.

The Asian edition of Hudson's quarterly report was launched in 1998. Its premise is that employer expectations of staffing levels reflect the general industry outlook.

Over 2,600 key employment decision makers from multinationals of all sizes in all major industry sectors were surveyed for the report, with 708 of the executives based in China.

Buoyant market

"China is the only market surveyed in Asia where employment expectations are rising this quarter, reflecting that the market is still buoyant, so employers have little scope to negotiate lower new-hire salaries, and few are experiencing any reduction in staff turnover rates," Angie Eagan, general manager of Hudson Shanghai, said.

The banking and financial services sector had the highest expectations: headcount growth forecast at 64 percent, compared with 57 percent in the March-June period.

Hiring is picking up after a period of consolidation, when banks were evaluating the impact of the subprime crisis and absorbing new regulatory measures. Much of that increased recruitment is in consumer and private banking.

But the biggest increase in hiring expectations was in the consumer sector, which went from a 45 percent forecast for headcount growth in the last quarter to 60 percent this quarter.

The third quarter is traditionally the peak season for the consumer sector, and August's Olympic Games boosted the retail and hospitality sectors. Expansion in tourism, retail and hospitality is also driving growth.

Wage pressure

Salary inflation is still a major issue for employers in China. Only 8 percent of survey respondents across all sectors said they had negotiated lower salaries for new managerial hires. Companies in the manufacturing sector were the most confident about paying less to new hires.

That's partly due to a trend for expatriate and Chinese returnee candidates to be offered local remuneration packages, the report said.

The media, public relations and advertising sectors had the lowest proportion of respondents who said they could negotiate on wages. There is a skills and experience shortage in this area and candidates are more likely to receive multiple job offers.

Of the employers able to negotiate lower starting salaries for new managerial hires, 35 percent said they had cut wages by 1 to 5 percent, while 52 percent had offered 6 to 10 percent less.

That suggests scope for lower starting salaries is limited in the current climate and that skilled staff are still in high demand in most sectors, according to the report.

"This is still a talent-short market, and the ongoing competition for strong candidates means that employers are not able to effectively combat the increases in asking salaries for new hires," Eagan said.

Staff turnover

Employers in China still face high turnover rates, with 71 percent of respondents saying there has been no reduction in the past year - the highest figure for all Asian markets surveyed, including Hong Kong.

Eagan said the market is still buoyant and there are many opportunities for skilled candidates. Consequently, staff turnover and retention are still major issues for employers in China.

The banking and financial services sector reported the highest retention rates, with 33 percent saying their staff turnover rates had decreased from a year ago. Many employers in the sector, particularly international banks, have developed human resources strategies to retain employees.

The information technology industry, in contrast, had the highest turnover rate with only 15 percent reporting lower staff turnover in the past year. Many in the industry tend to swap jobs regularly, to work with new products or systems.

Performance-linked bonuses and training and development programs are the most effective ways for companies to retain talented staff, the survey respondents said.

Across all sectors, 30 percent of the respondents said they offer performance bonuses, while 26 percent use training programs to encourage staff to stay.

Substantial pay increases are the third most popular way to keep staff, offered by 24 percent of the survey respondents.