Pessimism can’t cloud silver lining for economy
China’s slowing economy has exacerbated the gloomy sentiment about the world’s most populated market and sparked worries about massive job losses amid potential company collapses and loan defaults. But I firmly believe that this pessimism has been overdone.
Economic growth is slowing, but a year-on-year expansion of about 7 percent, or even slightly lower than that, is very positive in a global context. A recent survey by recruiting expertsHays has not only provided a snapshot of China’s economic status, but also added weight to the bullish outlook amid the country’s huge growth potential.
TheHays Global Skills Index 2015, developed in conjunction with Oxford Economics, showed China scored 4.7 points, 0.3 percentage point down from 2014. China’s slowly decreasing overall index (5.0 in 2014) suggests that employers are progressively finding it easier to source the skilled labor they need for their operations.
However, a deeper look into the seven indicators that comprise this index, show that employers still face real challenges in managing their human resources. The indicator for “overall wage pressure” (7.5) sends out a loud message: the Chinese employment market is still facing a shortage of skilled workers with employers prepared to use salary to compete for the top talent.
Our (Hays’) research also found that China is grappling with severe labor market inflexibility. There are signs that improvements are on the way, as with policymakers revisiting some vocational certifications and aiming to reduce the constraints on talent movement between industries, utilizing their transferable skills and encouraging a more active, fair and competitive job market.
Nonetheless, the prospect for stable economic growth in China remains bright, buoyed by the newgrowth engine which the government is striving to create. The Chinese leadership’s “newnormal” strategy— relying on strong consumer spending and youngsters’ enterprising spirit to sustain a slower but healthier growth— is more than just verbal support.
The central plank of the effort is to urge a wide application of Internet technologies to enhance business efficiency or create customer-friendly transaction models, aiming to redrawthe country’s commercial landscape. According to a report by iResearch, China’s leading market research company focusing on information technology, 47 enterprises in the country now sport the tag of “unicorns”, or unlisted Internet companies which are valued at no less than $1 billion. It’s just a matter of time before the upcoming Internet giants begin generating millions of newjobs.
It’s safe to say that China has already become a frontrunner in developing the online-to-offline model worldwide as the use of mobile technology in the country is ahead of any other market around the globe.
It’s true that China is losing its competitive edge in labor-intensive manufacturing sectors to some emerging economies, but awave of innovative technology companies could eventually offset the loss of jobs amid relocation of production facilities abroad. The Internet giants could usher in a complete chain of businesses, all the way from warehousing, delivery and after-sales services to payment. Newjobs are created in tandem with the expansion of online business empires. In fact, a transformation of the business model could lead to a temporary problem of talent mismatch that was reflected in theHays Global Skills Index which awarded China a relatively high score of 4.9. There are no quick fixes in tandem with the transitional period when employees, job seekers and businesses are experiencing some changes never seen before anywhere.
We propose some recommendations for policymakers, employers and international organizations: The first is to enable more and easier skilled migration to allow businesses to access workers with key skills. Second, it is necessary to ensure better training for employees and closer collaboration with schools, universities and technical colleges to deliver the skills’ pipeline of the future. And finally, businesses must be encouraged to embrace technology and maximize the skills at their disposal.