Recruiting in China

Salaries will grow 9.1% while turnover will remain high at 18.9% this year in China, according to a report released by Aon Corp, a London-based provider of risk management services and human capital consulting.

In the top four cities, Guangzhou will lead the way in manufacturing salary growth with 10.1%, followed by 9.8% in both Shanghai and Beijing and 8.9% in Shenzhen. Beijing's 9.5% will be the fastest when it comes to non-manufacturing salary growth, followed by 9.3% in Shanghai, 9.1% in Guangzhou and 8.9% in Shenzhen, the report says.

Salaries of manufacturing workers in second and third-tier cities are catching up with those in the top four cities, with the average difference narrowing to less than 5%. The report warns that employment risks are surging in smaller cities as local turnover keep running high. Turnover in Chongqing and Nanjing, two leading second-tier cities, is expected to be 22.3% and 19.4% respectively, well above 9.6% and 7.3% in 2006.

Spiraling living costs in coastal China have prompted plenty of manufacturers to move to the inland, causing regional labor shortages and higher salaries, according to Aon China vice president Zhang Hong.

In terms of industries, the highest turnovers are seen in retail (31%), hi-tech manufacturing (26.6%), fast moving consumer goods (19.5%) and healthcare (19.2%), which can expect faster salary growths of 9.1%, 9.6%, 9.7% and 9.5% respectively. The four industries are undergoing structural changes in the labor market, Zhang argues.

The Aon report is based on a survey of more than 4,000 firms across China engaged in the real estate, finance, healthcare, hi-tech, retail, chemical, logistics and manufacturing industries.