This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

December 19, 2007

China's Future Labor Market

Over the past decade, China's annual GDP increase has been nearly ten percent and for 2007, that growth is nearly 12 percent. We have watched this growth with interest and concern. China's striking rise to prominence is evident in many ways. Few expect that Chinese economic growth will slow substantially anytime soon.

Many of the developed countries have felt significant losses as the Chinese economy has prospered. However thanks to the Adecco Institute White Paper, published this month, we have a better understanding of China's situation.

China is not without its own list of major challenges: a significant and growing shortage of skilled workers, "massive economic transition, increasingly unequal income distribution, high unemployment, economic imbalance such as rising inflation, and a fast-aging workforce" (see TA from 12/3/03 entitled, "Global Demographics") are already beginning to have a detrimental effect on its national labor market. Moreover, as time passes, these challenges, if not addressed appropriately, will limit economic growth.

Back in 2005, we began covering China's labor shortage (see TA from 11/30/05 entitled "Attrition is an International Problem "). "Of all China's worries, there is little doubt that the growing shortage of skilled workers---leading to severe recruitment and retention problems---is one of the most pressing." It is surely at the top of foreign and local business interests. Certainly, the continuity of economic growth in China, and the sourcing of products there by foreign and national firms, will depend on the ability of Chinese firms to recruit and retain skilled workers, as well as their making productivity improvements. (see TA from 6/20/07 entitled "Global War for Talent")

"China is (currently) at full employment for skilled, technical, and managerial talent." In research conducted for the Adecco Institute, the Shanghai Academy of Social Science found that China's labor market faces 5 to 10 year supply constraints in five key areas of skilled labor: "management talent, English language skills, Research & Development personnel, senior and secondary technically skilled workers, and holders of professional certificates".

China's continued growth will depend on employers' addressing these critical issues. In a subsequent Herman Trend Alert, we will address its recently instituted labor reforms.

On 17 and 18 of January, Joyce will deliver her first workshop in Hong Kong. Titled "Advanced Talent Engagement", it will assist Chinese firms in addressing these critical issues. BONUS: Mention that you are a Herman Trend Alert subscriber and receive a 10% discount. Hurry, space is limited. Contact Jennifer at or 65 6825 9630.

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