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Strains Show in China’s Job Market

A wave of strikes and worker protests in China’s southern export belt is a fresh sign that slowing growth and rising wages have started to pinch the labor market on the world’s factory floor.

China Labour Bulletin, a Hong Kong-based labor group, has recorded 201 cases of labor disputes, including strikes, in the first four months of the year in China, almost double the number of cases in the same period last year. In the export hub of Shenzhen alone, 17 cases have been recorded.

China’s factories, which have been key components in its export-driven growth of the past decade, are under pressure from rising wages, sluggish demand at home and abroad as well as a stronger yuan. Some are shutting their doors or moving deeper into China’s interior, or in some cases to other countries, to hold down costs, often with little compensation for workers.

A survey of more than 4,000 employers by human-resources consultancy Manpower Group found that the net employment outlook deteriorated to 12% in the second quarter, down from 18% in the first, and the lowest level since the end of 2009. The net employment outlook is the difference between the percentage of firms anticipating adding workers and the percentage planning to reduce head count in the quarter ahead.

China’s leaders have so far resisted pressure to shift economic policy into stimulus mode. In his summit meeting with U.S. President Barack Obama, President Xi Jinping suggested he was comfortable with the slower pace of growth, according to a government website. But if fraying labor markets trigger rising social unrest, that calculus could start to change.

Still, the situation doesn’t so far appear as bad as at the end of 2008, when the global financial crisis triggered a wave of bankruptcies and pushed tens of millions of Chinese workers out of jobs. Then, the prospect of mass unemployment was part of the reason for a massive stimulus package that helped China maintain rapid growth.

When workers of the Jinshuntai Arts Factory came back from China’s Labor Day holiday in May, they saw a notice on the factory gate saying the plant in Shenzhen had been closed due to “management difficulties.” There was no word on compensation for workers, according to former employee Li Geming.

“I’ve been working here for 15 years. I just want my compensation for working all these years,” said 45-year-old Mr. Li, who had been employed at a company warehouse.

Jinshuntai Arts, set up in 1992, produced a range of toys and Christmas decorations, according to the website of the Shenzhen Municipal Market Supervision Administration. It is owned by Taiwan businessman Zheng Rongwen, the former chairman of Shenzhen’s Taiwan Merchant Association. He didn’t respond to calls on his cellphone, which subsequently appeared to have been turned off, and employees at his office in Taiwan said they hadn’t been in touch with him.

More than 200 former employees gathered at the plant on several occasions to protest the sudden closure, most recently on May 20. But the dispute remains unsettled, said Mr. Li, one of the many migrant workers who have been drawn to the factories of south China from their homes in the interior.

The Shenzhen Federation of Trade Unions said it has already intervened in the dispute but didn’t give further details.

China’s gross domestic product expanded 7.7% in the first quarter from a year earlier, not bad by global standards but below the norm for China. Economic growth was 7.9% in the fourth quarter of 2012, and economists have been cutting their estimates of growth for this year.

The latest economic data have added to the gloom: Export growth fell to 1% year-to-year in May—pointing to weak demand for the goods produced by many of China’s coastal factories.

As export demand slows, Factories are also becoming less competitive. The average monthly wage for migrant workers at the end of 2012 was 2,290 yuan ($374), up 11.8% from 2011, according to official data.

The yuan has also risen strongly against the dollar, hitting sales of exporters and squeezing their profits.

Some smaller firms have left Shenzhen for nearby cities where labor and land are cheaper. Some of the labor disputes arose when workers refused to move.

Shenzhen Grand Best Furniture, which once had about 60 workers, has moved to Huizhou, a smaller city about 68 miles from Shenzhen, according to current and former workers.

A former worker, Xie Shuixian, 46 years old, said he had been making couches for more than a year at the factory when it moved away. He said workers had protested the move but had since accepted a settlement.

“There’s no way we can stop them” from moving, Mr. Xie said, saying he received two months of back wages and a small settlement of 1,000 yuan as compensation.

The company’s human-resources officials didn’t answer phone calls.

Not all the signs on China’s labor markets are negative. Continued strong increases in wages point to strong demand. May data from Zhaopin.com, a leading recruitment website, shows a record number of new positions posted. That suggests that outside the factory sector, the hiring picture is stronger.

Still, experts say that trouble for China’s blue-collar workers is the shape of things to come.

“As China’s growth potential drops and labor costs rise, the number of labor disputes will undoubtedly increase in the future,” said Liu Cheng, a labor-law expert at Shanghai Normal University.

—Liyan Qi

From the Chinese press

After failing 41 job interviews, a resident of Wuhan, Hubei province, guessed that she was being discriminated against by potential employers because of her marital status – married but without any child – so she decided to conceal the fact to get a job. Many netizens have narrated similar tales, says an article in Chongqing Morning Post. Excerpts:
The Wuhan resident couldn’t find favor with any of the potential employers not because she is not qualified enough but because she is married but doesn’t yet have a child. That she is married but doesn’t have a child means she is eligible for a three-month maternity leave after being recruited, during which the employer has to pay her salary and welfare benefits.
Since companies without a sense of social responsibility see this as a financial loss and, therefore, are reluctant to recruit women like the Wuhan resident, many women have had to choose between a job and a child.
Many woman workers in a condition similar to the Wuhan resident’s find it difficult to land a job. To protect women’s reproductive rights, laws such as the Labor Law and the Law on the Protection of Rights and Interests of Women advocate “fair employment” and make discrimination in recruitment a punishable offense. For example, employers should not discriminate against woman employees, irrespective of their marital, social or ethnic status.
We can understand that employers want to lower personnel cost and increase productivity. But they should not infringe on the legitimate rights of women to get a job. Through enhanced annual supervision and inspection, the authorities should make sure that employers stop using unreasonable rules to recruit employees and that qualified candidates get jobs.
Workers’ safety comes first
A fire in a slaughterhouse in Dehui, Jilin province, killed 120 people and injured 77. And although relevant authorities have conducted specific safety inspections in densely populated places, they have come at a huge cost, says an article in Changjiang Daily. Excerpts:
Tragedies like mine accidents, fires and explosions have been reported one after another in recent times. Investigations into such accidents show that grassroots workers are more prone to getting injured or dying in such accidents.
Even the healthiest workers could become the victim of an occupational disease or industrial accident after working to exhaustion under harsh and dangerous conditions. And we know how difficult it is for workers to protect their legitimate rights and interests in case of accidents.
A report on the condition of new-generation industrial workers’ spiritual and cultural life shows the three main problems they face: A monotonous cultural life because of lack of entertainment channels, a narrow dating circle, and increasing pressure of work. In fact, not only the new generation, but almost every worker suffers from mental discomfort and limited exposure to spirituality. Most workers still have to strive to make a decent living instead of being content with the arrangements.
The problem lies in the daily situation of workers. Whether or not the production environment of a factory is safe and comfortable is closely related to workers’ labor rights and interests. If it is hard for the authorities to guarantee the safety of workers, it would be impossible to discuss their higher interests.

Balancing Paychecks

Thirty-year-old Ye Lei had worked in a state-owned factory in her hometown Jiangxi Province for seven years. Although she had been promoted to the position of the department head, she quit her job last month to work as a sales representative in a marketing company in Beijing.

“The first thing I want from the job hop is a higher salary. Career opportunities come second,” Ye said.

Ye had already received a 13-percent pay raise over the year earlier period before she quit the factory. On April 1, Jiangxi Province increased its minimum wage for the eighth time since 1995. Many workers in Ye’s factory have benefited from these wage increases.

Currently, in the most economically developed areas of Jiangxi Province, the minimum wage is 1,230 yuan ($196) per month, or 12.3 yuan ($1.96) per hour. Whereas in some less developed areas in the province, the minimum wage is 900 yuan ($143) per month or 9 yuan ($1.43) per hour.

Even with the raise, Ye still felt her income wasn’t keeping up with the increasing cost of living. With profits of the factory dwindling and some of her workers leaving for greener pastures in the service sector, it was time for Ye to jump ship as well.

China’s fast-growing service industries are luring workers away from the manufacturing sector. Modest hikes in local minimum wage ordinances do little to staunch the flow of personnel, to which the recruitment postings near the gate of Ye’s factory can attest.

A report of The Wall Street Journal presents data showing that in the previous five years, the service industry created 37 million new jobs in China, much more than the 29 million created in manufacturing.

Labor shortage for the manufacture sector in China is not seasonal or short-term, said Kelvin Lau, senior economist of Standard Chartered Bank. Competition for labor is expected to drive up wages.

Stories of wage earners

On May 17, the National Bureau of Statistics of China released last year’s average annual wage of the workers in urban non-private sectors, which mainly comprises state- and collectively-owned enterprises and public service institutions. The data show that in 2012, workers in those sectors made an average of 46,769 yuan ($7,459), a nominal 11.9-percent increase over that of the previous year. After deducting inflationary factors, the real annual growth rate was 9 percent.

As often, the release of national salary statistics sparked discussions and prompted people to share their income-related stories.

Lu Mengying, a 31-year-old resident in Beijing, is happy about her current income. She was recently hired as sales representative by a company selling luxury goods.

“My base salary and commission usually add to about 8,000 yuan ($1,276) per month. If things go well, I can make more than 10,000 yuan ($1,595),” she said.

Lu had previously earned rather little at a marketing company in Beijing’s Zhongguancun area, China’s Silicon Valley, where she had worked for six years after she graduated from university.

Promising earnings prospects drew her to the luxury industry. She enrolled in an expensive training program on luxury industry management. The 15-day training program cost her more than one year’s income, but Lu found it worthwhile, as it helped her land her current job.

According to Lu, a “buyer” of a product line under a luxury brand in her company can make at least 500,000-700,000 yuan ($79,700-$111,600) a year. The buyer’s duty is to run around the world to collect product information, contact suppliers, place orders and procure products to meet the needs of various consumers.

Currently, buyers are in short supply in China. Lu said that because of her limited ability and her 3-year-old child, she doesn’t want to become a buyer, at least not right now. She’s more confident about working her way back up to management—of a boutique rather than a factory. Few people in China meet the qualifications for store manager, so such individuals are highly sought after by luxury brands.

Lu’s optimism is not unsubstantiated. Last year, a number of international brands exploring markets in second- and third-tier Chinese cities discovered significant demand for sales, human resources, training, business development and leasing professionals, according to a 2013 global salary survey by leading recruitment consulting firm Robert Walters.

Although business executives in many industries get fat paychecks, as indicated by the Robert Walters survey, most first-line workers do not.

Twenty-year-old Li Min, from Huainan City in Anhui Province, is a waiter in Shanghai. His parents also work in Shanghai, and they must support Li’s two younger brothers.

As much as he’d like to chip in, Li can barely cover his own expenses, and he doesn’t expect his 1,000 yuan ($159) monthly earnings to rise anytime soon. He plans to borrow some money from acquaintances and open a car wash.

Liu Guobao, a 43-year-old welder in Shanghai, also barely makes ends meet. His monthly salary increased to 3,800 yuan ($606) last year from 1,800 yuan ($287) in 2006. Yet having to raise two school-age daughters, he has little money to squirrel away.

The National Bureau of Statistics said that, although average wages in 2012 grew quite fast, income levels differed across regions, industries and positions, and the income gap is yawning wider.

Income disparity in China is quite high. Last year, the country’s Gini coefficient, a gauge of income inequality, reached 0.474 after four consecutive years’ drop from its peak level in 2008. Nonetheless, it shows an alarmingly wide gap between the rich and the poor in China.

“Since the implementation of the reform and opening-up policy in 1978, China has already established an income distribution system suiting its national conditions and development stage. Yet some salient problems still exist in this area,” said Zheng Gongcheng, a professor researching social security at Beijing-based Renmin University of China.

Zheng is also a member of the Standing Committee of the National People’s Congress, the country’s legislature. He cited such problems as front-line workers’ income is still too low, the income gap between various groups is too big, and some people get “grey” and “black” income.

“Increasing ordinary workers’ income is a long-term task in the income distribution reform,” Zheng said.

Reform suggestions

Public concern over income disparity has prompted government regulatory measures.

Income distribution reform is not as simple as salary reform, said Su Hainan, Deputy Director of the China Association for Labor Studies. Su said that it should involve reform of taxation, social security, social welfare, and other systems.

On February 5, the State Council approved and published opinions on deepening income distribution reform.

The document says that the government will strive to double the average real income of urban and rural residents by 2020 from the 2010 level and let the poor enjoy faster income growth.

Through the reform, the government also aims to expand the middle-income group, sharply reduce poverty, and adjust and regulate excessively high and hidden income.

The government also seeks to raise the share of residents’ income in total national income, and increase government expenditure on social security and employment.

The urban-rural disparity is a major contributor to the income gap in China. Some experts say that the urban-rural income gap can explain more than 40 percent of China’s income disparity.

Some experts suggest that to shrink the income gap, the government should reform the household registration system, eliminate discrimination against migrant workers, and give farmers greater pricing power when they transfer their contracted farmland.

Monopoly is also another cause of income inequality. Monopoly industries usually pay well, not because their employees work harder, but because of their monopoly of national resources, said officials from the Ministry of Human Resources and Social Security.

Even inside state-owned monopoly industries, income is very unevenly distributed. The Ministry of Human Resources and Social Security and the National Development and Reform Commission once conducted a survey on salaries in dozens of large and medium-sized state-owned enterprises in several monopoly industries, such as petroleum, telecommunications, aviation and electric power generation. The survey showed that in these companies, the highest-paid employee takes home five to nearly 100 times as much as the lowest-paid employee.

Zeng Xiangquan, Dean of the School of Labor and Human Resources at the Renmin University of China, advocates breaking up the monopolies to let markets determine executive salaries as a solution for this particular form of income inequality.

In addition, income distribution reform should not only be an “incremental reform” but also a “stock reform,” said Zheng. That is to say, previous unequal income distribution, as reflected in unequal distribution of accrued wealth, should also be adjusted.

To bridge the gap between the rich and poor, both income and property should be regulated, Su said.

The State Council’s opinions on deepening income distribution reform indicate the government may soon levy property taxes beyond the scope of the current trials in Shanghai and Chongqing. The possibility of a consumption tax was mentioned, and the government is exploring the feasibility of levying an estate tax in the distant future.

Zheng also suggested that on one hand, the reform should address some pressing issues, and on the other hand, it should set up stable systems to accommodate rational public expectations. He said that confidence in the future can alleviate people’s uneasiness and anxiety.

Retail Investment in China

China’s retail development and investment opportunities are progressively spreading to large second- and third-tier cities – all with populations above 1 million – which puts added importance on building the right contacts and partnerships in China’s real estate market.

“Understanding a local market – its incomes and consumer preferences – is becoming the single most important challenge for developing and investing in China, and that is really only done with local partners,” said Rong Ren, chief executive officer of Harvest Capital Partners, a Hong Kong-based real estate investment, development and management firm that launched two successful retail investment funds in 2010. “You need to come to China with a longer-term vision and strategy. It’s not for speculators looking for quick deals,” said ULI member, Ren.

China remains one of the hottest economies emerging from the global recession, making it an increasingly favorable environment for property investment. China’s GDP is forecast to grow at a torrid 8%-10% pace during the next few years, and China is expected to surpass the United States in total commercial real estate development during the decade of 2009 to 2019, according to Pramerica Real Estate Investors, part of Prudential Financial Inc.

Retail is already playing a significant part in this growth. Across Asia, retail property deals jumped 38% in the first half of 2010 compared to the same period of 2009, and in China’s largest cities, retail sales surged on a year-over-year basis, rising 19% in Shanghai through May and up 16% in Beijing in the second quarter, CB Richard Ellis reported. Total retail sales in China are predicted to double in coming years, from $2.09 trillion (US$) in 2010 to $4.21 trillion in 2014, according to Business Monitor International’s third quarter China Retail Report.

“In the current climate, China’s retail market has greater potential as an investment vehicle than almost any other retail market in the world,” KPMG and property service firm Knight Frank concluded in an investment trends report earlier this year.

The main drivers of China’s retail potential are the country’s continuing urbanization and rising consumer culture. Although Chinese per-capita spending remains below U.S. levels, annual consumer consumption in China is forecast to grow six-fold during the next three decades, according to Goldman Sachs economists. Meanwhile, the proportion of China’s population living in urban cities has jumped from 19% in 1980 to an estimated 45% today. This is resulting in a dramatic shift in geographic distribution, with 200 cities in China now boasting populations of at least 1 million.

China has four giant first-tier metropolises – Beijing, Shanghai, Guangzhou and Shenzhen, along with Hong Kong off the mainland. The national government also ranks two-dozen other cities as “second-tier,” generally provincial capitals with populations near or above 10 million — places like Chengdu, Hangzhou, Suzhou and Zhengzhou. At an International Council of Shopping Centers conference in Beijing in November, many of those cities were viewed as under-retailed and ripe for development.

“Foreign investors are entering such cities to explore potential investment opportunities, as it’s much easier for them to find suitable investment inventories in those cities, and the continuous improvement in retail sales and consumer spending is also convincing them of the market’s potential upside,” Danny Ma, director of CB Richard Ellis’ China Research, said in an interview.

Developers and investment firms such as Turkey’s Star Mall Group, Singapore’s Keppel Land and Hong Kong investors Hang Lung Properties and Harvest Capital Partners have been actively pursuing projects in China’s so-called smaller cities. Harvest raised $600 million (US$) this year, primarily from North American pension funds and individual investors, to develop and manage family-oriented shopping centers. These centers typically involve 100,000 square meters (1,076,391 sq ft) in a 4- or 5-story building, anchored by a Wal-Mart or Sam’s Club and including electronics outlets, brand-name stores like Nike and Zara, a movie theater and sometimes a skating rink.

The concept is designed to appeal to children, and with China’s one-child-per-family policy, each child typically brings two or more adults. “Our type of shopping mall, the family destination mall, is a popular trend,” Harvest’s Rong Ren said in an interview.

Still, retail development and investment in China come with plenty of challenges. These include: long delays in the regulatory approval process; occasional government regulations to limit foreign investment; onerous requirements such as developing super-blocks instead of single sites; and lots of domestic competition – domestic purchasers accounted for more than three-fourths of Asian real estate deals in the first half of 2010, according to CB Richard Ellis.

In a nutshell, it’s difficult for foreigners to get a foothold in China, which is why Harvest’s Ren and others recommend establishing investment partnerships there to manage the risks. “If you have no contacts in China, it will be difficult for you to get the approvals,” said George von Liphart, managing director of Peninsula Real Estate Capital Advisors in San Francisco and a veteran China deal broker who is chairman of ULI’s Global Exchange Council. “It is still very much a question of who you know and how you cultivate that.”

Overall, retail development and investment in China promise the tradeoff of low initial yields – usually 4.5% to 6.5% – in exchange for greater longer-term asset appreciation. Harvest Capital Partners is trying to buck that trend, with its new retail investment funds targeting 15% and 20% net returns over 5 and 6 years, respectively.

“Overseas investors must have a business presence in China before they can make any actual acquisitions, while the Chinese government is posing stringent control over the approval of investment funds in China,” said CB Richard Ellis’ Ma. “Therefore, the most viable option for foreign investors would be to source an equity deal via an offshore structure, such as looking for an equity investment in Chinese developers that are listed (on the Hong Kong Stock Exchange) and have some investable-grade retail assets.”

Taking stock of China’s logistical shortfall

Employers in China face such a severe shortage of logistics staff that one British company is offering work to 20% more candidates than it has jobs.

Paul Brooks, sales director of Unipart Logistics, said that the company regularly offered employment to between 10% and 20% more candidates than it had jobs because they knew that within a week this number of candidates would take up job offers from other employers. The firm employs 250 staff in China.

At a press conference during a recent visit to Unipart in Oxford by a Chinese delegation of logistics and education officials to the UK, Brooks said that staff retention was also a major issue, with the industry experiencing an annual staff turnover of more than 50%. Even a small wage increase would entice employees to move to another employer. “They will leave for 30p more, they will just not turn up,” said Brooks.

Haoxiang Ren, vice-president of the China Federation of Logistics and Purchasing, told Recruiter that in China “the skills shortage is for every subject and every position in the sector.”

Ren explained there was a fundamental mismatch between the demands of employers and what the Chinese education system is turning out. “Demand is like a pyramid,” he said, with many more lower level operative-type jobs at the bottom, and relatively few jobs for managers at the top.

Despite this, he explained that around 400 universities in China provided 100,000 graduates a year studying logistics as a major part of their degree, leading to a glut of people looking to enter the sector at managerial level.

The problem is made worse, “because more and more parents are looking for their children to go to university and not college”, he added.

In contrast, Ren said that only 90,000 graduates with a relevant qualification left 800 secondary vocational colleges (for 15-18-year-olds) — an insufficient number to fill the far more numerous lower-level roles. “It [the education system] doesn’t fit the nature of the industry demand,” he said.

Less Chinese students taking tough college test amid job slump

The number of Chinese students taking the country’s tough national college entrance test has declined by 10 per cent amid reports that most of last year’s seven million graduates struggled to get gainful jobs.

Around 9.12 million high school students are registered to sit for China’s national college entrance examination called ‘Gaokao’ which is being held all over the country today and tomorrow.

Despite the huge numbers, figures for those taking the test have declined year-on-year for five years, from the peak of 10.5 million candidates in 2008 to 9.15 million in 2012.

“Every year, about 10 per cent of high school seniors don’t take the Gaokao, because some are pre-enrolled in university and some study abroad or go to work. The proportion hasn’t fluctuated greatly in recent years,” Xu Mei, spokesperson for the Ministry of Education told the media ahead of the test, regarded as toughest in China.

But the dwindling numbers are also attributed to the reports that the Chinese graduates who were in much demand when the country grew at over 10 per cent in the last several years are now struggling to get placements as the growth declined to 7.8 per cent last year.

The IMF also predicted that China’s GDP may further decline to 7.5 per cent or less.

A recent report by state-run CCTV said the spectre of unemployment is haunting the youth as Chinese colleges are churning out over seven million graduates a year, far higher than previous years due to extensive development of educational infrastructure.

With job vacancies scarce, 2013 has been dubbed as “the toughest year of employment” for seven million graduates, the largest number since 1949, state-run Global Times reported.

In a bid to address the fears, Chinese President Xi Jinping recently attended a job fair to instil confidence while Premier Li Keqiang said high priority would be accorded to create more jobs.

Chinese economists directly relate GDP numbers to employment prospects as every percentage of economic growth produces few million jobs and the employment market shrinks if the economy declines with firms shedding jobs to cut costs.

Education experts said that some students from rural areas may also not bother with the Gaokao, as they see no hope of entering colleges, cannot afford the tuition fees and worry about finding jobs after graduation.

The average cost for four years’ university study is about 75,000 yuan (USD 12,217) while the per capita income in rural areas was 7,917 yuan a year in 2012.

“For most rural families, supporting a college student is a big investment. They must consider both input and output,” Lao Kaisheng, a professor with Capital Normal University said.

However, Xiong Bingqi, deputy director of the 21st Century Education Research Institute, said the bleak employment outlook is unlikely to mean more students will forgo the Gaokao.

“There is no better choice than the Gaokao, so most students will still attend universities even if they are uncertain about their future,” said Xiong.

Employers struggle to find talent

Shortfall in skilled workers may threaten future growth, McKinsey says

Wu Hao doesn’t think much of China’s young people. Even college graduates, the Hebei factory manager says, don’t have basic skills. “Smiling and shaking hands: I have to teach them this,” he complains. “I thought it was cute at first, but it’s really not funny.”

Mr. Wu is hardly alone in thinking it’s hard to find good help. In 2013, more than a third of employers in China surveyed said they struggled to recruit skilled workers. As China evolves from being the workshop of the world to, perhaps, being a services powerhouse, it will need more high-skilled workers. And it looks likely to run short.

According to new McKinsey research, in 2020, China will have about 24 million fewer high-skilled workers – those with university degrees or advanced vocational training – than it needs. If China does not bridge the gap, the costs, in the form of lower productivity and lost opportunities, could be more than $250 billion, which is about 2.3 percent of the country’s GDP.

Two mismatches are contributing to this problem.

One is geographic. Major cities like Beijing and Shanghai draw in ambitious young people from around the country and thus have more high-skilled labor than they can use; mid-sized and smaller cities don’t have nearly enough. This mismatch is particularly acute when one considers where future growth is likely to come as the character of China’s urbanization process changes. Specifically, in the next two decades, most growth will take place outside the top 40 cities.

The other is between what employers want from graduates and what they are getting. Surveys consistently show that employers are not satisfied with the skills of their new tertiary hires, whether academic or vocational. The main complaints, according to McKinsey research – and a wealth of anecdotal evidence – are: lack of technical training, inadequate English, and deficient soft skills, such as the ability to work in teams, independent thinking, and innovative flair.

Larger social trends are exacerbating matters. Over the past generation, the key to China’s remarkable productivity improvement has been the massive movement of people from country to city, from farms to factories. The apparently endless flow of new entrants to the labor force kept wages in check.

This strategy can no longer work. Official statistics show that the pace of migration is beginning to slow; at any rate, the generally low educational level of migrants means that they do not have the skills that companies need. Moreover, due to the one-child policy, the number of people in the workforce will fall in absolute terms, as it did in 2012, by 3.45 million.

In short, just when China needs many more skilled people, its population will be falling. China’s fewer workers will therefore need to be better ones, with skills suited to faster-growing sectors, such as high-end manufacturing, wholesale and retail trade, health, and education.

To bridge the skills gap, China has two advantages. One is that this is an area where industry and the private sector have every incentive to step up efforts. The other is that there are good examples of what works, from countries rich and poor, and in just about every industry. These solutions can be readily adapted and scaled up. Here are some ideas that work:

Engage youth early. Where the required skill is rare or new, don’t wait for the next generation to grow up and get interested: get to them while they are still in school. A number of industry-led programs, such as South Africa’s Go for Gold, expose youths to particular professions during secondary school, then assist them in training and further education. South Africa’s construction and engineering industry gets a pipeline of talent, and the young people, many of them from disadvantaged backgrounds, get a foothold in a fast-growing sector.

Run intensive boot camps. These are short programs that focus on delivering particular skills. One example is Dev Bootcamp, a United States-based for-profit computer-programming course that takes students of widely different ages and backgrounds; drills them intensively for nine weeks; and works with employers to understand exactly what they need. At the end of 2012, Dev Bootcamp said it had placed more than 90 percent of its graduates, at an average starting salary of $83,000. China is in a good position to develop boot camps because the for-profit education and training market is developing rapidly. Regardless of job or supplier, it’s imperative to involve employers, emphasize learning through practice and simulation, and assess proficiency to ensure that graduates are ready to work.

Create your own talent pipeline. Some of the most powerful solutions are those where leading employers come together to define the skills that they need and then work with local education providers to shape the curriculum. That is the story behind the Automotive Manufacturing Technical Education Collaborative, a joint program of 30 community colleges and major automakers that operate in the US to prepare students for careers in high-end auto-manufacturing skills. Collaboration can also be done on a for-profit basis. China Vocational Training Holdings is a private company that works with automakers to provide training to 100,000 students a year. It provides more than half of the industry’s new workers.

China can see the skills gap coming. If it fails to take the steps to close it, that would be a colossal mistake – on the order of $250 billion.

McDonald’s hopes to wow Chinese with rice

With an eye on dinner tables in the Chinese mainland, McDonald’s, the world’s leading fast food operator, on Wednesday announced new rice products for the mainland market.

Starting from June 10, the new products, including chicken and beef rice wraps, will be sold in all 1,700 McDonald’s restaurants on the Chinese mainland.

The core menu, including the chain’s staples like the Big Mac and McChicken, will not be changed, Kenneth Chan, chief executive officer of McDonald’s China, said in the press release.

“Our new dining options are examples of how McDonald’s innovates to bring more options to our Chinese customers, because that’s what they want,” Chan said.

The company’s strategy includes more efforts to develop the night consumption market from 5 p.m. to 5 a.m., thought it has put more emphasis on breakfast, lunch and afternoon snacks in the past, he said in an interview with Xinhua.

According to the latest data from McDonald’s, dinner foods account for half of foreign food operators’ sales in China and this market is growing at a double-digit pace.

Meanwhile, McDonald’s will set a series of standards regarding rice quality and safety, Chan told Xinhua. McDonald’s sources the rice it uses on the mainland from Harbin, capital of northeast China’s Heilongjiang Province, one of the country’s major grain production areas.

The company plans to maintain its competitiveness and boost its overall business growth by increasing the variety of the products it offers, he said.

McDonald’s opened its mainland first store in Shenzhen, Guangdong Province, in 1990. It has currently more than 1,700 outlets and over 90,000 employees on the Chinese mainland. It plans to recruit 75,000 more this year, and the number of mainland outlets is expected to reach 2,000 by 2014.

The U.S.-based fast food giant has about 34,000 stores worldwide. In 2012, McDonald’s same store sales rose 3.1 percent as revenues rose 2 percent to 27.57 billion U.S. dollars.

In 2013, the company plans to invest about 3.2 billion U.S. dollars of capital in opening 1,500 to 1,600 new restaurants and reinvesting in existing locations. It targets a system-wide sales increase of 3 percent to 5 percent and operating income growth of 6 percent to 7 percent.

Civil servants are least happy employees in China

Civil servants are the least happy employees in China, research has revealed.

A survey of over 9,000 respondents found that civil servants had the lowest level of job satisfaction of the 12 sector categories that were included.

According to a report on the All-China Women’s Federation website, employees working in the private sector had the second lowest levels, whilst the happiest employees worked in foreign enterprises and joint ventures. The survey was commissioned by the Psychology Institution of the Chinese Academy of Sciences and hosted on recruitment website Zhaopin. Three quarters of those who took it were below the age of 30.

Li Xupei, deputy director of the Mental Health Promotion Centre at the Chinese Academy of Sciences, said some people entering the civil service believed their job would be “easy”, but later found that they were “constantly working overtime” and that the work was unexpectedly challenging.

A 2012 survey of civil servants in China’s central departments of state also found that 13.5% suffered from severe or extreme stress. Despite this, the number of people taking the recruitment exams for the Chinese civil service rose to a record 1.2m in November 2012.

According to China’s Global Times, the Ministry of Human Resources and Social Security has begun a pilot project which offers new civil servants fixed-term employment contracts, ending the widely-held perception that a job in the civil service is a job for life. This may reduce demand for government positions in future.

Li said the survey also found that, despite low satisfaction levels, the “collective happiness” of civil servants was high due to the respect they receive from the public.

China Faces Serious Brain Drain Crisis

China has the highest number of top talents moving overseas in the world, News.cn reports

According to the Office of Central Talent Work Coordination Group, about 87 percent of professionals regarded as top talents working in the science and engineering field have chosen to emigrate out of China.

A survey released by the Chinese Academy of Sciences shows that many innovative talents in the Chinese science & technology sector, especially in the fields of physics, mathematics and computer sciences, have served in high positions in the world organizations.

With the current fierce international competition for expertise from such personnel, many developed countries have been attracting talent by adjusting their immigration policies, and some developing countries have now also joined the global competition for talent.

Nearly one million Chinese overseas students returned to China through the “Recruitment Program of Global Experts” (1000 Talent Plan), including 20 thousand high-quality overseas professionals.

The report quotes a senior official with the Office of Central Talent Work Coordination Group as saying that China needs more flexible talent development policies and mechanisms to attract more talent coming back.