Recruiting in China

Political advisors Wednesday called on the government to make greater efforts to raise migrant workers' salaries and ensure they have a better standard of living.

With more than 200 million such workers in cities across China, how to better protect their rights and interests has become a crucial issue, members of the country's top political advisory body said Wednesday in Beijing at a meeting on achieving more balanced development between urban and rural areas.

They also called for substantial measures to be taken to provide these workers with insurance for workplace injuries, better educational opportunities for their children and more affordable housing.


Li Zhuobin, a member of the Standing Committee of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), said migrant workers still face employment discrimination and poor access to public services.
Citing the construction industry as an example, he said migrant workers' salaries could be two-thirds or half that of their urban counterparts.

In other cases, employers refuse to hire workers without urban permanent residence permits.

"Many employers do not pay them on time," said Li.

"In sectors that hire a large number of migrant workers, such as construction, catering and entertainment, the government should be strict on implementing the salary deposit rule," he said.

The rule, introduced in May 2004 by the former Ministry of Labor and Social Welfare, requires construction companies to deposit a certain amount of money in a labor department bank account. The money is used to pay migrant workers who fail to receive their due salaries.

In addition, the training of rural workers fails to fully meet employers' requirements and the public employment service's efforts to help migrant workers find jobs are inadequate, he added.

Li suggested that preferential policies to promote employment should cover both urban and rural residents.

Authorities in Shenzhen are looking to attract 560,000 workers from rural areas of Guangdong over the next five years in a bid to counter rising labor costs, a provincial official said on Tuesday.

"Shenzhen's ambitious plan is part of the province's double transfer strategy," Lin Yingwu, deputy director of the Guangdong labor and social security department.

"Other cities in the delta region will follow suit," he said

The aim of the strategy is to attract workers to the manufacturing centers of the Pearl River Delta, as well as relocating some production bases to areas with large workforces in a bid to reduce soaring labor costs, he said.

Four industrial parks, funded by the Shenzhen and local governments, have already been built in rural areas of Guangdong, the Nanfang Daily reported recently.

Shenzhen has signed labor cooperation agreements with 14 rural cities, and on Monday, 128 employers from the city offered about 40,000 vacancies, with monthly salaries ranging from 1,300 yuan ($190) to 2,500 yuan, Lin said.

Labor departments in Shenzhen and the 14 cities will work together to improve communications and facilitate the movement of workers, Guan Lingen, director of the Shenzhen labor and social security bureau, said.

Also, online interviews will be held wherever possible to eliminate travel costs, he said.

Li Qingqing, an associate professor of economics at South China Normal University, said the double transfer strategy will be beneficial to all the cities involved.

"Under the plan, delta boomtowns will no longer need to worry about the shortfall of laborers, while the growing rural population will be able to find better ways to make a living," she said.

Twelve vocational high schools will be built in the Pearl River Delta over the next few years to train up to 100,000 students from less-developed areas of Guangdong to meet the soaring demand for skilled workers in the region, a local education official said yesterday.

A Nanfang Daily report quoted Luo Weiqi, director of the provincial education department, as saying: "The development of vocational education will be a priority over the next few years.

"A dozen vocational schools, each with 5,000 to 10,000 students, will be set up, and secondary schools in better developed areas of the Pearl River Delta region will be encouraged to work with their counterparts in less developed regions."

The delta region has long faced a shortage of labor, and skilled workers are now in particularly high demand as the region seeks to switch focus from labor-intensive manufacturing to value-added industries.

In contrast, there is a surplus of unskilled workers in the northern, eastern and western regions of Guangdong.

Sending students from poorer regions to train in the Pearl River Delta is, therefore, a win-win situation, Luo said.

Lai Hongying, a publicity official with the education department, said that by 2011, the province aims to train 2 million students a year, up from 1.3 million last year.

Under the same timeframe, it also aims to recruit 600,000 new students a year, up from 540,000 last year, he said.

Polytechnics and universities will also seek to attract more students in the areas of science and technology to provide a richer human resource for the development of a modern industrial system, he said.

In a bid to achieve our goals, we will improve working and living conditions for teachers in rural areas, and go "all out" to attract top academics from home and abroad, Lai said.

More workers engaged in disputes with their employers will get access to legal aid as a result of new guidelines issued by China's top trade union body.

According to the document, which was released on Monday by the All-China Federation of Trade Unions (ACFTU), unions at county level or above will set up legal aid agencies to help workers resolve labor disputes with their employers.

The agencies will also help them safeguard personal and property rights related with the disputes.
Workers can apply for legal aid from the agencies even if they are not union members, Xie Liangmin, deputy director of the federation's law department, said.

However, they should be in "financial difficulties" in order to qualify for free legal aid.

At present, each province has different criteria to judge workers' financial situation. In some areas, people covered by minimum social security can qualify for legal aid.

The document also stipulates that workers who do not meet the criteria can still apply for legal aid if their rights are "seriously" violated.

Rural migrant workers who have problems in getting payments or compensation for occupational injuries from their bosses are qualified to receive free legal aid regardless of their financial situation.

"Many workers don't have adequate knowledge of laws and are often discouraged by lengthy legal procedures," Xie said.

"Legal aid agencies will do their best to help the workers use legal weapons to safeguard their rights and interests."

According to statistics provided by the ACFTU, trade unions in China had established 6,178 legal aid agencies by the end of last year, in which they accepted 46,000 cases involving lawsuits and helped to solve 29,000 of them.

"Trade unions started to offer legal aid in 1992," he said.

"The new document will guarantee the status and funding of legal aid agencies."

Chu Junhua, a lawyer with the Beijing Workers' Aid Center, said the number of workers applying for legal aid has increased sharply in recent years.

The HR outsourcing market in China is expected to be worth more than £41bn at the end of this year, according to a new study.

Outsourcing provider EquaTerra said the Chinese market was experiencing rapid growth and would expand by at least 25% by the end of 2009. Five years ago, the market was valued at only £8bn.

EquaTerra spoke to 15 leading China-based HR directors of foreign businesses. They cited several reasons for not outsourcing HR to China, including concerns about data security and loss of management control.

But they acknowledged that a significant proportion of HR administration functions would be outsourced in the next three to five years, with payroll and recruitment leading the way.

However, the report warned that China still does not have enough skilled manpower to meet the growing demands of the HR outsourcing market.

EquaTerra said this would lead to wage acceleration for providers, margin erosion and talent shortages.

"Ultimately, the dominant players will be those companies that can obtain and retain quality delivery people," the report said.

To read the full report, download the Human Resources Outsourcing in China pdf

Mike Berry (About this Author)

51job Inc.'s (JOBS) financial results for the second quarter showed a lower net profit margin due to higher sales and marketing expenses and a higher tax rate. Both its revenue and EPS missed the market consensus.

Although 51job continues to have the highest brand recognition in the online and offline recruiting markets in China, the leading position hasn't gained any competitive advantage for 51job to improve its profit margin. Therefore, we are downgrading the stock from Buy to Hold.

China has 253 million internet users as of the end of June 2008. It has approximately 750 million workers now and more and more companies of different size begin to use low-cost online recruiting. This is a very positive tail wind environment in which to operate. Additionally, it is estimated that revenue of online recruiting services in China will reach RMB 2.63 billion in 2011. According to estimates, revenue of online recruiting services will amount for 45.3% of the total recruiting market in 2010.

Through a targeted sales and marketing strategy, 51job has been focusing on further building the '51job' brand as the 'one-stop' human resource services provider. Now 51job is the most famous brand in the recruiting market in China and this position has helped the company enter more profitable second-tier cities in China.

Using a P/E multiple of 18.2x our fiscal year 2009 earnings per ADS estimate of $0.70 yields a target price of $12.75, which can reflect company's great growth prospects, in our view.