Pressure on Mainland China’s Labour Market Eases Despite Growing Talent Mismatch

• Pressure on Mainland China’s labour market has eased over the last five years
• Notwithstanding, the modest increase in job vacancies results in signs of a talent mismatch
• All industries have seen strong wage increases

Talent mismatch has worsened in Mainland China over the year, according to the seventh edition of the Hays Global Skills Index (‘the Index’), a report published by recruitment experts Hays in conjunction with Oxford Economics.

This year’s report – titled ‘Investing in the Skills of Tomorrow; Avoiding a Spiralling Skills Crisis’ – examines professional employment markets across 33 countries and markets and measures the ability of companies to access skilled workers, providing a unique insight into the health of the global labour market.

In Mainland China, the Overall Index score has decreased to 3.8 from 5.0 in 2013, suggesting that the labour market has been less pressured than historical norms over the last five years. The Overall Index score is an aggregate of the seven key indicators which were chosen to highlight supply-side issues, demand-side issues, or both supply- and demand-side issues relating to the hiring of skilled workers.

A key issue contributing to the labour shortage is the increasing talent mismatch, attributing to the growing rate of job vacancies in Mainland China. The lower score compared to previous years in this respect indicates that employers are finding it harder to find workers with the right skills. Hays experts have identified that shortages are prevalent in Internet, ecommerce and digital professionals roles, which are high in demand.

Wage pressure in high skill industries has increased compared to last year. The higher score this year reveals that wages in high-skill industries are growing faster than in low-skill industries relative to the past, which is indicative of sector-specific skills shortages. In Mainland China, there is particularly fast growth in scientific research and health, leading to greater industrial dispersion.

Across Asia*, improvements in education levels and other socioeconomic factors have driven up general participation rates. This year, however, a slowdown in the growth of labour market participation rates across various age groups has been a major driver of the region’s higher score. Businesses are therefore struggling to find the right talent and continue to suffer from low productivity levels.

Commenting on the findings of the Global Skills Index, Simon Lance, Managing Director at Hays Greater China said:

“The Index provides us with invaluable information about labour markets and whether the global workforce is equipped with the skills required to flourish in the rapidly developing world of work. This year’s Index has revealed the many issues currently in the labour market globally, such as the growing talent mismatch, widespread productivity puzzle, ageing population, gender pay gaps and the shirking share of the national income for workers.”

“In Mainland China, a gradual easing of the Overall Index score in recent years reflects the growing capabilities of the local labour market to meet the demands of employers in most industries and professions. However, the signs of a talent mismatch in Mainland China means that there still exists a gap between the skills businesses are looking for and the skills available in the labour market.”

“In order for organisations to operate to their full potential, they need to be able to access the most sought after skills. As such, businesses and policymakers are recommended to ensure that workers are prepared for technological disruption by fundamentally reviewing existing training and education programmes, and to embrace diversity in all its forms, not just because it’s the right thing to do, but because it makes business sense too.”