Annual salary increase moderates in Mainland China: large salary increments expected for attracting top talents of skills in shortage

The global leading recruitment specialist Hays releases its 2019 Hays Asia Salary Guide today. The guide provides analysis and insights into salary and recruitment trends in more than 17 industrial fields based on a survey across Asia markets, including the Chinese mainland, Hong Kong Special Administrative Region, Singapore, Malaysia, and Japan.

The guide highlights that business activity in Asia was up year-on-year in 2018 and it predicts that trend will continue in 2019.

“2019 will be another active year for HR and Recruitment professionals” says Simon Lance, Managing Director of Hays Greater China. “Although businesses in the Chinese mainland are less optimistic about their economic prospects, more than half of the organizations surveyed indicated they would still increase their permanent headcount. That indicates strong underlying business confidence in the Chinese market, and will fuel ongoing demand for top talent particularly in high-skill industries & discipline.”

Salary trends

According to the Guide, in the past year, 40 per cent employers in the Chinese mainland increased salary by over 6 per cent; 36 per cent offered salary increases of between 3 to 6 per cent. In 2019, 44 per cent of employers surveyed in the Chinese mainland plan salary raises of between 3 to 6 per cent. And 35 per cent said that they would increase salaries by more than 6 percent in 2019; although this percentage was down from previous years, it is still almost double the average in Asia. In contrast, a majority of companies in Japan (70 per cent) and Singapore (59 per cent), and a considerable proportion of businesses in Hong Kong (44 per cent) and Malaysia (35 per cent) said they would offer salary increases of less than 3 per cent.

“The salary increases may not as much as that in the past years in the Chinese mainland, however, the increase level overall is higher than that of other Asian regions,” Simon says.

“It is worth noting that there is a disconnect in the salary expectations between employees and employers in the Chinese mainland and other Asian regions. In the Chinese mainland, as much as 44 per cent of employees are expecting increases above 10 per cent, but only 8 per cent of employers plan to offer such a salary raise,” adds Simon.

Competition for talent in Chinese Mainland

Looking at the skills demand trends in the Chinese mainland, Simon says that technology innovation, industry automation, digitalization, and the boom in domestic consumption will be the main areas driving the demand for talents across a wide range of sectors. Candidates with experience and skills in IT, digital technology, manufacturing, life sciences, financial technology and sales are in high demand and will have greater bargaining power.

Information Technology: Driven by new technologies, the IT industry will maintain strong growth momentum in 2019. There will be greater competition for talents in fields of artificial intelligence, the internet of things, cybersecurity and software engineering. Market competition in this fast-growing, increasingly connected business environment is pushing Chinese enterprises to accelerate their digital transformation programmes in 2019, with technologies such as bigdata, the cloud, IoT, and AI the driving forces. Among these technologies, AI is at the forefront of transformational change in the Chinese mainland, in sectors such as education, banking, healthcare, security, manufacturing and industry. The strong demand for AI talent has seen salaries increase from between 35 and 50 per cent, and even fresh graduates with a bachelor's degree can make between RMB 300,000 to RMB 500,000 a year. Candidates with AI skills can make 50 per cent more than those in other industries.

Manufacturing & Operations: In 2018, the Chinese mainland’s manufacturing sector underwent an accelerating shift from labor-intensive to high-end manufacturing as the international trading environment changed dramatically and Chinese regulators further tighten monetary policy. There is still appreciable demand for talents in the areas of product development and quality control, and candidates in these functions could conservatively expect to see 20 to 30 per cent salary increases by taking roles at different companies. The development of semiconductors is driving the manufacturing, especially chips used in AI applications. Hence, a number of Chinese tech companies are aggressively pursuing top talents, and candidates with chip design experience and they may receive salary increment offers in excess of 50 per cent. The growing demand for electric vehicles is also driving demand for R&D talents in the automotive sector.

Life Sciences: The Chinese mainland’s ageing population has made life sciences a hot industry, especially as it is a focal point in government’s latest Five-Year Plan. The areas of oncology and chronic diseases are particularly attractive for investors. The majority of investment is going to innovative biotech companies and startups leading to a hiring frenzy in the industry, thereby positively impacting candidate salary packages.2019 is expected to see heightened demand for life science scientists and researchers. The average salary level of junior to middle management level clinic research positions is expected to increase by 20-30 per cent, and the salaries of data management specialist/manager roles are expected to rise by 30-40 per cent.

Financial technology: 2019 is expected to see sustained high demand for candidates in Chinese mainland’s finance technology sector. With a multitude of factors such as domestic economy, the rise of internet finance and the introduction of new government regulations for financial institutions affecting the recruitment market, candidates with blockchain experience are of increasing value. Candidates with skills in Java, C++, mobile development, algorithms and data are in great demand. The newly-created vacancies will far exceed the existing talent pool.

Sales: The e-commerce industry in the Chinese mainland continued to grow rapidly throughout 2018, and that growth is expected to be carried through 2019. A number of job opportunities will be created by exciting start-up firms that are expected to initiate operations in 2019 and foreign e-commerce platforms that are beginning to find their feet in the Chinese mainland. Some companies are willing to offer up to 100 per cent salary increases for suitable talents along with equity incentives and other benefits.

Talent shortage

Amid robust talent demand in various industries, Hays finds that skills shortages remain a concern for employers in 2019. Almost all (98 per cent) surveyed companies in the Chinese mainland believe skill shortages harm the effective operations of their businesses or departments, and 68 per cent said skill shortages have a negative impact on productivity. Only 49 per cent of business think they have the talent needed to achieve current business objectives.

In Asia, the lack of training and professional development (45%) and competition for job opportunities (39%) are considered to be the top two main reasons for skill shortages by employers. Companies are seeking to address immediate skill shortages by up-skilling current workforce (62%), improving attraction strategy (47%) and transferring employees between different functions (37%).

Get your copy of the report by visiting our 2019 Hays Asia Salary Guide web page or by contacting your local Hays office.

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