(written for Chinabiz)
A few years ago I wrote a book called "Fifteen misunderstandings about China and the Chinese" (available in German and Dutch) explaining an often ignorant outside world what kind of misconceptions they have about China. When I would have to rewrite it again I would certainly add a chapter about China's labor market. Let's tackle a few problems.
Every Thursday a group of veteran media people hold court in the Cotton Bar at Anting Lu in Shanghai and every week some of these young enthusiastic journalists, who have been evading their shrinking home markets, hope to find fertile grounds in this booming economy. They are wrong and will most likely end up as English teachers or will end up working for my colleagues Maria Trombly, who hires US journalists for Chinese or Indian salaries, depending on their preference. Being part of a declining industry does not help, also not when you are in China.
But not only foreigners coming to China complain about their possibilities, for the Chinese the situation is not that different at this stage. The other week I had an "exit-interview" with an old friend from Shanghai who had last year taken up a job with a major international company in Shanghai. There was a boy friend involved, so she wanted to come back anyway, even though her salary was the same as when she left years ago for a US MBA and a few years of international working experience. The boy friend moved back to the US and her Chinese salary was no reason to stay. "I can get much more in the US." Most Chinese MBA's do not make it even back to China. They know the market and vote with their feet. Again, on a personal level money is not the only thing that matters, but on a macro-level it certainly does.
When companies complain about the lack of experienced managers in China, they mostly have blame themselves. In our beginning practise of the speakers bureau we see a similar feature. A typical request for a speaker is "a Chinese professor, who is an authority on the Chinese economy, fluent in English and with an international outlook'. Then clients tend to be genuinely amazed that this international outlook includes an international speakers' fee.
I'm not sure whether companies coordinate the level of compensation for their staff among themselves, but I would be surprised if they would not. CEO's from leading companies would meet each other - for example in meetings of the American and European chambers of commerce - and all would have a common interest in not letting the wage increases getting out of their hand. What really is happening on the wage front is unclear, because of the lack of decent information, but hr-departments of the larger companies would at least have a clear hunch of the general developments.
In profitable industries that are expanding fast, like banking, money is suddenly no problem. To compensate for the outflow of Chinese staff, foreign banks have started to hire expats again in large numbers, a recent survey of PwC disclosed among 35 foreign banks. The banks in the survey were employing in 2006 2,800 expats, compared to 475 one year earlier. I'm sure we will see a similar pattern in upward wage costs in the years to come, not only for expats, but also for qualified Chinese managers.
I'm sure they could also keep qualified Chinese staff it they would give them a higher salary. They would be able to convince Chinese to return to China. Money matters and for money you can get competency. At this stage, international companies - with the exception of the banks - are reluctant to use the wage tool to keep staff.
The money issue might not only be limited to the English-speaking well-educated Chinese managers. A report by an institute of the Chinese Academy of Social Sciences indicates that the number of migrant-workers in China is not as huge as previously assumed. The report says that the total number of migrant workers is slightly over 50 million, while it has always been estimated to hoover between 100 million and 150 million. The media have largely ignored that rather stunning report that says that by 2009 we might see a labor shortage and upward pressure on the wages.
This is not your average "harmonious society" bullshit the Chinese media cover on a daily basis. I know the director of the institute who did the research and he is an acknowledged international expert on labor issues in China. Unfortunately, the Chinese media have not yet read the full report so interesting question have not been answered. Like: have those 100 million missing migrants never been there, or have they just disappeared from the labor market, for example because the situation at the country side has improved? The Western media are even worse: they have just ignored it.
Times are going to be interesting in China, also financially, that is, if you are working in a booming industry.
Fons Tuinstra
1 comment:
If expat, the boss, lives in a vila, with maids and driver to take care of his/her needs and family needs, it does not make much sense that the workers is making peanuts that most o f them cannot even afford to rent a room in Shanghai. So wages have to go up. But is that the bottom line solution?
As an exapt (short term) in Shanghai many years ago, I was quite ashame to see the ocean of gaps between my wages and the local engineers. We even lived in different hotels. Or in the same hotel but different floors etc. We got daily allowences in USD, and thier's in RMB. So, how is one going to close the gaps? How can one not expect resentment? But is MONEY the real issue here? I don't think so. Treating employees of the same company fairly is what is missing.
But then of course, even in NL, an expat would be paid so much more than the local (worked in an American organization in the Hague). But there is less resentment because the Dutch labour law ensures even minimum wages for the local covers decent livings that includes housing, food, transportations etc. SO I think the comment of the manager that it is ridiculous the Dutch or most Europeans would work 10, 15 years for the same company is actually missing the point. What she dosen't see is (or not willing to), as human being we all look for stability especially if one has children. So, if the job is ok, the income is ok, most people would stay. Changing another job needs lots of energy. Most people would not do that. Even the Chinese.
But then, is increasing wages the real answer? Not really. Satisfaction of a job dose not stop at just money. Many surveys would list money almost at the end of the scales. The problem starts with the government, start with the unfair market value of RMB, start with the many social issues in China ... the list is long. But really the problem would not be solved unless the government is willing to look at China as a fair player in the global environment. What Chinese government is doing right now is all short term solutions. Long term? They are shootting their own feet. BIG TIME.
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