Wage pressure

Salary inflation is still a major issue for employers in China. Only 8 percent of survey respondents across all sectors said they had negotiated lower salaries for new managerial hires. Companies in the manufacturing sector were the most confident about paying less to new hires.

That's partly due to a trend for expatriate and Chinese returnee candidates to be offered local remuneration packages, the report said.

The media, public relations and advertising sectors had the lowest proportion of respondents who said they could negotiate on wages. There is a skills and experience shortage in this area and candidates are more likely to receive multiple job offers.

Of the employers able to negotiate lower starting salaries for new managerial hires, 35 percent said they had cut wages by 1 to 5 percent, while 52 percent had offered 6 to 10 percent less.

That suggests scope for lower starting salaries is limited in the current climate and that skilled staff are still in high demand in most sectors, according to the report.

"This is still a talent-short market, and the ongoing competition for strong candidates means that employers are not able to effectively combat the increases in asking salaries for new hires," Eagan said.

Staff turnover

Employers in China still face high turnover rates, with 71 percent of respondents saying there has been no reduction in the past year - the highest figure for all Asian markets surveyed, including Hong Kong.

Eagan said the market is still buoyant and there are many opportunities for skilled candidates. Consequently, staff turnover and retention are still major issues for employers in China.

The banking and financial services sector reported the highest retention rates, with 33 percent saying their staff turnover rates had decreased from a year ago. Many employers in the sector, particularly international banks, have developed human resources strategies to retain employees.

The information technology industry, in contrast, had the highest turnover rate with only 15 percent reporting lower staff turnover in the past year. Many in the industry tend to swap jobs regularly, to work with new products or systems.

Performance-linked bonuses and training and development programs are the most effective ways for companies to retain talented staff, the survey respondents said.

Across all sectors, 30 percent of the respondents said they offer performance bonuses, while 26 percent use training programs to encourage staff to stay.

Substantial pay increases are the third most popular way to keep staff, offered by 24 percent of the survey respondents.

(China Daily September 12, 2008)