Category News of China

China to reform income distribution mechanism

In a bid to address widening wealth gap, China has unveiled a major plan to reform its income distribution mechanism, proposing to tax the rich and state units more besides imposing caps on salaries of top managers while increasing lower staff pay.

The reform will focus on increasing residents’ income, narrowing income distribution disparity and regulate distribution order, a statement issued by the China’s Cabinet, which approved the 35-point blue print, said.

As per the reform plan, the government will work to double the average real income of urban and rural residents by 2020 from the 2010 level and facilitate the poor to enjoy faster income growth.

The reform also targets raising the proportion of residents’ income in the overall national income and spending more government funds on social security and employment. However the statement said: “deepening the income distribution reform is a systematic project that is arduous and complicated and concerns the reallocation of various interests. There is no way to accomplish it overnight”.

The income reform plan was approved as China saw its income gap between new rich and poor was yawning, even with its economy emerging as second-largest in the world.

The Gini coefficient, a rich-poor index, reached 0.474 in China in 2012, higher than the warning level of 0.4 set by the United Nations. The reform plan was announced as wealth gap was identified as major threat to the ruling Communist Party of China’s hold on power.

It came a month ahead of the one-in-a-decade power transfer under which new administration headed by CPC new leader Xi Jinping would take over power from next month replacing Hu Jintao.

The new guidelines offer directions on an extensive range of policy areas such as taxation, subsidies, salary system, financial regulation, household registration and social security.

The guidelines set a target of reducing the number of people living below the poverty line of 2,300 yuan ($366) in per capita annual net income at constant 2010 prices by around 80 million as of 2015. That will be a drastic fall from about 128 million in rural areas who were defined as poor in 2011. According to official estimates China has 150 million people under the poverty line.

Under the plan farmers will be guaranteed proceeds from transferring their contracted land plots and collect higher revenues from gains in the land value.

The plans aims at officials, state-owned enterprises (SOE) and wealthy individuals in its bid to strengthen regulation of the high-income group, state-run Xinhua news agency reported.

Rules that demand government officials report their income, real estate assets, investment and family members’ jobs will be implemented more strictly, the guidelines said.

SOEs must impose ceilings on payments to their senior management who are appointed by the state and make sure senior staff’s salary growth is slower than the average level for general employees, they said.

The percentage of profits that central SOEs have to hand in to the government will be increased by around 5 percentage points by 2015 from the current level and the added income will go to social security.

The guidelines also proposed keeping the staff scale of central and local governments from growing in the 2011-2015 period and rigorously controlling government spending on receptions, car purchases and driving as well as overseas tours.
To tax the rich more, the government will expand experimental property taxes gradually, collect consumption taxes on more high-end entertainment activities and luxury products, and study imposing inheritance taxes “at an appropriate time”.

In the meantime, foreign individuals will no longer be exempt from personal income taxes on stock dividends and bonuses they obtain from foreign-funded enterprises in China, according to the guidelines.

Salary gaps between top cities narrowing

The salary gap between China’s first- and second-tier cities will narrow this year as the nation speeds its urbanization process, human resource experts said on Thursday.

China’s single-digit economic growth is unlikely to impact recruitment in 2013, and job applicants with better knowledge of local markets will find it easier to get employment, said a survey released by Robert Walters Plc, a United Kingdom-based recruitment consultancy.

Overall salary levels in China will be “slightly higher” than in 2012, with candidates moving jobs usually able to get a 15 to 25 percent pay increase, according to the survey. Those who stay put will get rises of around 8 percent, which corresponds with the World Bank’s estimate in January that China’s 2013 GDP growth could reach 8.4 percent.

“As more international players enter lower-tier cities, talent was also lured away from metropolises such as Beijing and Shanghai. The trend will help narrow salary differences among Chinese cities,” said Arthur Wang, managing director of Robert Walters China.

He added that while there was a salary gap of 40 percent between people doing the same jobs in Shanghai and Suzhou two years ago, the current pay differential is between 15 and 20 percent.

However, there was a drop in demand for candidates with Western backgrounds, despite the nation’s increased globalization.

People from other Asian economies, such as Hong Kong, Taiwan, Singapore and Malaysia were preferred in the Chinese mainland due to their ability to communicate in Mandarin and adapt to Chinese culture, said the survey.

“Global conglomerates are desperate to turn China into a solid profit generator, but, in order to achieve this, they need employees who are familiar with the mainland market,” explained Wang.

Although many international brands have scaled back their expansion plans in China, a number of players still intend to enter smaller cities in the country, boosting recruitment in their sales, human resource, training and business development departments, said Robert Walters.

Demand for new employees in the retail and luxury sectors may grow by up to 20 percent year-on-year until 2015, and salaries in these sectors may rise annually by 15 to 25 percent, said Wang.

In addition, the banking and financial service sectors will also see strong demand for new employees this year, said Wang.

Although the sectors were the hardest hit during the global economic crisis, a number of companies have already started to announce expansion plans in the first two months of this year.

“Many overseas financial firms delayed their expansion plans last year, which is set to trigger bigger recruitment initiative as the economy stabilizes,” said Wang, adding wage increases could hit more than 20 percent for high quality employees.

Job seekers to increase in first quarter

With an improving economy in China, there will be more active job seekers in the first quarter of this year, the recent Hays Quarterly Report found.

Some sectors have ambitious hiring plans, such as life sciences. New companies aiming to gain a strong foothold in China are also recruiting actively.

In the property market, employers are looking for the next generation of leaders capable of critical decision making. They are also ramping up hiring in second and third-tier cities where the real-estate market still has room to grow.

With a talent shortage in some industries, such as IT, employers are looking at overseas candidates.

However, salaries do not always match the expectations of overseas candidates, hence the perennial talent shortage.

In some cases, employers are willing to offer higher salaries, such as to senior candidates with advanced skills or specialized expertise. At the same time, some employers are implementing training programs and retention plans to help grow talent internally.

Additionally, on the whole, the number of overseas candidates interested in working in China is on the rise, particularly in the construction industry. Foreign architects and designers continue to arrive in China looking for opportunities. The majority of candidates are from Europe.

As the Chinese market is faring better than others, overseas returnees also continue to seek opportunities in the world’s second-largest economy.

Skilled and experienced professionals in areas of high demand have become far more selective about the companies and positions they will consider. They are taking longer to think about roles and will wait for the ideal position to become available, said Simon Lance, regional director of Hays in China.

“Candidates are also putting more emphasis on the brand and reputation of a company when considering their next career move. Entry and mid-level candidates tend to look at the scope of development in a new company and senior-level candidates assess the cultural fit and salary package on offer. In the sales industry, however, more candidates are looking for a bigger career platform and support from the company rather than salary increase,” he said.

‘Starting salary for love’ in cities of China

Recently, a dating website released a report in which single women take the “starting salary for love” as a minimum requirement to accept their ideal boyfriend. In the report, most women from the 90’s, 80’s and 70’s require a partner who is able to make more than 5000 yuan a month as “starting salary for love”. There are differences in different cities. The most expensive are in Shanghai, Shenzhen and Beijing, where “the starting salary for love” is above 8000 yuan. This report made many people astonished and said it was too high.

The appearing “starting salary for love” represents a set of values but not the truth. Will you be happier if you are rich? It can’t be answered with yes or no. Just like a pop song lyric said “love is not something you can buy”. Similarly, happy marriage is also not something you can buy.

Chinese manufacturers scramble to find workers

Chinese low-cost manufacturers are trying various ways to retain workers and attract new ones after the Lunar New Year holiday, as the country’s economic recovery brings in more orders.

Factory workers, mostly rural migrants, usually go home for family reunions during the traditional holiday. But many take advantage of the break to find better jobs and therefore do not return to their former employers.

Companies have raised salaries or offered financial incentives in an attempt to retain workers.

“Although the whole industry is still mired in gloom, we still plan to raise the workers’ salary by 10 percent this year,” said Tian Chengjie, vice president of Silverman Holdings Ltd., a textile company in Zibo of eastern Shandong Province.

In a bid to get workers back, many companies reportedly chose to pay year-end bonuses after the holiday. Some promised to offer a reward of 1,000 yuan for each year of their service.

Amid efforts to recruit enough workers, some companies promised to reward staff hundreds of yuan if they brought along new workers. Some even offered hundreds of yuan to workers’ parents.

However, for many employees higher pay is not enough.

Increasingly, migrants, especially the younger generation, demand respect and good working conditions.

Executives at Orans Co. Ltd., in Taizhou in the eastern coastal province of Zhejiang, lined up at its factory gates and bowed when staff returned to work Monday, the first day after the Lantern Festival.

The respect the executives showed won praise from netizens.

“This should not be seen as a mere show. You can only make fortunes by showing respect to the labor force,” wrote a netizen under the name of “Yunjianwei” on Sina Weibo, a popular Twitter-like microblogging service.

Other netizens also called for better conditions rather than just higher pay or bonuses.

“A friend called me today saying only a low proportion of their workers had returned after the holiday and they also had difficulty in recruiting new ones,” said a weibo user under the name of “Liang Yong.”

“This does not come as a surprise if the employers do not show care towards the employees’ life and psychological needs. Please do not see the workers as machines,” “Liang Yong” added.

The labor shortage has attracted more media attention as the economic recovery looks like it will worsen the problem.

It comes as China’s labor force between the age of 15 and 59 shrank by 3.5 million last year. It is the first time the country has recorded an absolute drop in the working-age population in “a considerable period of time,” Ma Jiantang, National Bureau of Statistics director, said last month.

Hundreds of companies in Dongguan, dubbed “factory of the world” in the booming southern province of Guangdong, reportedly set up booths along a street to recruit workers Monday, but only a few migrants showed up and made inquires.

Many employees have chosen to work near their hometowns in the central and western regions as many companies have relocated there in response to the country’s industrial restructuring in coastal areas.

Also many young migrants now do not wish to work for low-cost manufacturers where work conditions are not good even though they offer higher pay. For them, the routine work offers no excitement or career prospects.

Wan Zhong, president of Wanjia Shengshi Human Resources Co. Ltd., in Jinan, capital of Shandong said, “The labor shortage could prompt low-cost manufacturers to accelerate industrial restructuring and upgrading as well as offer workers better conditions.”

Bosses try to woo workers as economy recovers

JINAN – Migrant workers who used to demand unpaid wages from their bosses before traveling home for a family reunion may find their positions reversed after the Spring Festival.

After the week-long national holiday, Wang Jiwan, board chairman of Qingdao Hengda Co., a shoe manufacturer based in eastern China’s Shandong Province lined up with 50 senior executives at the factory gate, bowing to welcome returning workers.

It may seem odd, but he is not alone. Many companies are trying every trick in the book to attract workers and make them feel wanted. Some distributed cash ranging from 200 yuan (31.85 U.S. dollars) to 500 yuan to parents of employees who promised to come back after the holiday. Others offered a 15-percent pay rise in the new year.

Due to a lack of fixed employment contracts and rising living costs, each year after the Spring Festival, a traditional family holiday, it is common that migrant workers default on their jobs to settle back down again in their hometowns.

Labor shortage, a concern that has long plagued Chinese business owners, is an old problem and as the economy picks it will only get worse.

This year, manufacturers are suffering from shortages. However, it is not due to staff leaving but the warming economy, which has meant more orders on the books.

Labor shortages become particularly acute after the Spring Festival. However, this year is somewhat different, said Wan Zhong, manager of Wanjiashengshi, a human resource company based in Jinan, Shandong Province.

Enterprises have not lost a significant number of staff. Instead, they need more employees to fulfill rising orders, according to Wan.

“The 40 companies that had outsourced a recruitment process to us reported a lower staff turnover compared with previous years. They want more workers simply because the economy has survived the crisis and they would like to expand production,” he said.

China’s economic growth quickened to 7.9 percent in the final three months of 2012 after hitting a three-year low in the third quarter, according to data from the National Bureau of Statistics.

Official data also showed that the purchasing managers’ index (PMI) for China’s manufacturing sector has been kept above 50 percent for four straight months since October. The January figure fell slightly by 0.2 percentage point from December to 50.4 percent.

A PMI reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

Manufacturing is regaining momentum, boosted by domestic and global recoveries, said Zhang Weiguo, an economic expert with the Shandong Academy of Social Sciences. He forecast that manufacturers will do much better than last year.

“This year the company has plenty of orders. Workers can soon start work once they are in place,” Wang Jiwan said, adding that Hengda, which ships 40 percent of products overseas, will see sales up about 30 percent in 2013 as international demand rebounds.

Meanwhile, Shandong Haosheng Group, a home textile manufacturer, is short of about 500 workers due to increasing orders from the domestic market.

The company has seized orders from seven upstream firms in Jiangsu and Zhejiang provinces after the Spring Festival, according to the company’s human resource manager, Sun Luguang.

Most employers will scale up hiring in the first quarter this year, especially the post-Spring Festival period, as the economy rebounded in last quarter, said Feng Lijuan, a human resource expert with 51job.com, China’s leading online job-hunting service provider.

Labor-intensive industries including real estate, automobile parts manufacturing and pharmaceutical companies posted a high number of recruitment requests, according to a survey conducted by 51job.com.

Meanwhile, experts said China’s economy will pick up steam this year. A report compiled by Xiamen University forecast that the country’s economic growth will rise by 0.43 percentage points from last year to reach 8.23 percent in 2013.

Chinese businesses struggling to recruit skilled workers

More than one third of Chinese businesses are struggling to recruit skilled workers, posing a major challenge for their growth prospects, a report by international accounting firm Grant Thornton said on Wednesday.

Almost 50 per cent of enterprises from industries such as technology have reported difficulties in hiring skilled workers, the report said.

The survey suggests a lack of general work skills and specific technical skills is the key factor making recruitment difficult.

“In such circumstances, job seekers should improve their general workplace skills in areas such as teamwork and communication and their specific technical skills in order to stand out in the fierce competition for employment,” said Xu Hua, CEO of Grant Thornton China.

The Grant Thornton International Business Report revealed that 61 per cent of businesses in China cite shortage of general work skills as the primary problem in recruitment and 55 per cent of them cite a shortage of technical skills as the major concern.

Over half of both traditional industries – construction, food and beverage and healthcare – and emerging industries such as technology and business services, said that both factors hinder recruitment.

“The dilemma and difficulties in both obtaining employment and recruiting workers are still prominent,” said Xu. On one hand, the labour market is saturated and the employment situation is still severe for graduates, and on the other hand, businesses find it difficult to recruit qualified labour.

“In the long term, businesses need to improve their own training programs which will be able to help staff’s growth and deliver talent in a sustainable manner, rather than pinning their hopes on recruiting skilled workers from the talent market,” he added.

Businesses are also worried about the upcoming “job-hopping” season. According to research, besides increasing the workload for the remaining staff, 32 per cent of businesses said losing staff also results in loss of business orders and increases operating costs.

Hospitality enterprises are more worried than other businesses that a loss of staff may result in a fall in customer service standards, with 37 per cent citing this as a concern.

And 25 per cent of businesses in technology said staff losses will delay the development of new products or services, more than any other industry.

“A business is nothing without its people. A great team with an average plan will be far more successful than an average team with a great plan. With the upcoming job-hopping season, businesses need to do more communication work with its staff, and build up their talent pool at the same time,” Xu added.

Contact the writer at huyuanyuan@chinadaily.com.cn

Chinese companies face skills shortage, report says

More than one-third of Chinese companies are struggling to recruit skilled workers, posing a major challenge for their business-growth prospects, a report by international accounting firm Grant Thornton said on Wednesday.

Almost half of the companies from sectors such as technology and clean-tech reported difficulties in hiring skilled workers, the report said.

The Grant Thornton International Business Report revealed that 61 percent of companies in China cited a shortage of general employability skills as the main problem, while 55 percent said that a shortage of technical skills is the major concern.

Over half of both traditional industries — construction, food & beverage and healthcare — and emerging industries — technology, clean-tech and business services — believe that those two factors are hindering the recruitment process.

Xu Hua, CEO of Grant Thornton Jingdu Tianhua, said that job seekers have a hard time obtaining employment, while companies also have difficulties during the recruitment process.

On one hand, the labor market is saturated and the employment situation is difficult for graduates, but on the other, businesses find it difficult to recruit qualified employees, the report said.

“In the long term, businesses need to improve their training programs, which will be able to help with the development of their employees and deliver talent in a sustainable way, rather than pinning their hopes on recruiting skilled workers from the talent market,” Xu added.

Businesses are also worried about the upcoming job-hopping season to a certain extent.

According to the research, besides increasing the workload for the remaining staff, 32 percent of businesses cite loss of orders as the main problem that staff retention issues have caused, while 32 percent think that increasing operating costs is the most important issue.

Compared with other industries, hospitality businesses are more concerned about the fall in customer service standards. And 25 percent of businesses in the technology sector consider that turnover will delay the development of new products and services, a higher percentage than any other industries.

Apple’s producer in China halts hiring, sparks speculation

Foxconn says a recruitment freeze is not due to slowing production of the iPhone5.

Foxconn, the huge company that makes high-tech products including the iPhone, said Wednesday that a recruitment freeze at its vast facilities in China was not due to slowing production of the iPhone5.

“Due to an unprecedented rate of return of employees following the Chinese New Year holiday compared to years past, our company has decided to temporarily slow down our recruitment process,” said a Foxconn statement Wednesday.

“This action is not related to any single customer and any speculation to the contrary is false and inaccurate,” the firm said.

Some dispute that explanation. A story Wednesday by the Financial Times based in London said the hiring freeze comes amid poor iPhone5 sales.

The Chinese website yicai.com, a financial news site based in Shanghai, reported that Foxconn facilities in central China’s Zhengzhou and southern China’s Shenzhen have stopped recruiting new workers, but will employ more robots in the future.

Boosted by global demand for Apple’s electronic, the Taiwanese manufacturer Foxconn has grown into mainland China’s largest private-sector employer, with 1.5 million workers. So news of hiccups in its operations can spark market concerns worldwide.

Apple shares were down slightly to $452.60 Wednesday morning.

Many employees are not at work this week due to Chinese Lunar New Year. The annual New Year festival, falling this year Feb. 9 to 24, is a time when almost all Chinese factory workers head back for once-a-year visits to often distant hometowns.

The Shenzhen Evening News said that Foxconn had decided to stop recruiting three months ago. The recruitment center website for Foxconn in central China’s Henan province carries a banner headline advising that the firm will not hire for the next half year.

Migrant workers in shortage after Spring Festival holiday

With China’s Spring Festival holiday winding to end, many migrant workers have already returned to their cities of work. But a large number of them are staying put at home for a while longer. It’s posing a challenge for employers, who are acting fast to bring in more workers.

For many companies in China’s east Zhejiang province, recruitment has to be done at train stations.

Here in Shaoxing city, migrant workers are stuffed with job ads the moment they step off the train.

Zhu Xiaofeng, recruitment staff of Jingdongfang Display Tech. Company, said, “Our production scale is expanding and we need an additional 50 workers urgently.”

Wei Haifeng, recruitment staff of Zhende Medical Co, ltd., said, “We’ve been here twice and also the bus station. We hand out our advertisements and if they would like to work with us, we drive them to our company directly.”

But many of these workers are coming back with a signed contract already waiting.

Employers have also been shouldering the rising cost of labour.

In southern city Shenzhen, the minimum wage for full time work has risen from 1500 yuan to 1600 yuan per month, a record high in the country. The new policy has drawn many workers to the city.

A browse through Shenzhen’s recruitment sites shows employers often clearly lay out workers’ welfares. And typical salaries vary from 2000 yuan to 4000 a month.

“There were fewer companies who recruited in the past years. But this year, there are more out there offering much better pay than before.”

“We pay every worker 3 thousand to 4 thousand yuan a month. This is a huge burden for small companies.”

But there are also optimistic voices from employers, saying the pressure of rising costs is driving industrial reform, which will benefit companies in their long run.