Recruiting in China

Employees in China’s richest city, Shanghai, saw salaries stagnate this year – at least compared with what they have grown used to.

They can’t expect much of a pick-up in 2010 either. Perhaps worse for many Shanghai workers used to ever-upward mobility is that its people will do merely as well as the rest of China.

Human-resources firm Hewitt Associates LLC on Thursday predicted average annual salary increases will be 7% in 2010, about equal to what is expected nationwide.

That won’t necessarily make things comfortable for employers. Hewitt’s Shanghai Compensation and Benefits Study concludes that for employers, it will be back to the challenge of hiring enough good workers: “In order to hire more talent, enterprises have put salary increases on the agenda.”

The study, which included 911 enterprise participants, shows the average annual salary increase in 2009 in Shanghai was 5.2% in the non-manufacturing sector and 5.4% in the manufacturing sector, about half the 11.2% and 10.1% increases seen in those sectors in 2008. The average lagged the national level of a 5.8% increase in salaries in 2009.

“As an international financial metropolis, Shanghai is inevitably influenced by financial crisis,” the firm said.

Rather than layoffs, it found salary freezes in Shanghai this year. The voluntary rate of turnover – job-hopping – slid 3.4 percentage points in 2009 to 13.9%, the firm found.

The employees still commanding good increases this year: pharmaceutical and medical-device firms, up 8.9% and 9.1% respectively.

The market for new job seekers was tougher than ever. The average starting salary for a fresh university graduate was 45,153 yuan ($6,615) this year, while post-graduates could earn 63,732 yuan.

Separately, Standard Chartered Bank economist Stephen Green, in a report Thursday, takes issue with the conclusions reached in China’s effort to track urban private sector wages. He said the National Bureau of Statistics study probably captures only about 42% of the nation’s 450 million workers. Since the ones missed are likely lower-paid migrant workers, the official statistics probably overstate actual wages, said his report.

Mr. Green puts the urban wage at 1,476 yuan a month, compared with the government’s estimate of 2,077 yuan.