Employers in China Face Shifting Skills Demands and Limited Movement of Workers to Urban Opportunities

A changing workforce and new priorities facing talent leaders today are prompting organizations to re-think how they secure critical skills. The following excerpt from Allegis Group’s latest research report, “Global Workforce Trends 2018,” focuses on conditions in China, demonstrating the economic and demographic trends currently shaping how talent is won.

China

In China, the demand for skills has shifted dramatically over the past several years as the government has sought to move from a manufacturing focus to a more services-driven economy with an IT focus. Unfortunately, the worker population does not have the number of people with the right skills to support that shift. As a result, nearly every industry struggles with the demand for talent in China.

Since 2013, when the country began shifting toward an IT services focus, the percentage of manufacturing work as part of the total workforce picture has leveled off and begun to drop. And, in 2018, China’s unemployment rate fell into record-breaking territory at roughly 3.9 percent, according to Trading Economics data. The job growth that caused this drop in unemployment is being driven by the services sector, which impacts IT and other skilled labor, though many workers still are employed by state-owned enterprises.

Overall, recent industry employment data is elusive and subject to debate, but employment numbers indicate that the demand for skilled workers is likely to continue over the coming year. Roughly six percent of China’s 777 million strong workforce is considered “highly skilled.” Xinhua News Agency reports the shortage of skilled workers is expected to be approximately three million in 2020, and will rise to 4.5 million by 2025.

A labor shortage in China is being felt acutely in large coastal cities as many workers stay in their provinces where they can find work. Contributing to this lack of movement is the “hukou” policy that requires households to register their residences in defined rural or urban areas. Implemented in 1958 to prevent mass migrations and civil unrest, the policy does not extend certain benefits to migrants, keeping much-needed workers from moving to the cities that urgently need their skills. Adding to the labor issues is a population that has been limited by one-child policies. Those policies have been relaxed slightly, but their effect on the population remains.

The job vacancy situation has been steady, with cited openings holding at approximately 4.5 million (compared to 6.5 million in the U.S.). The real vacancy figure may be higher because the survey behind the data only represents around half of the cities in China.

Download pdf: China by the Numbers

Download PDF: China Manufacturing Work as a Percent of the Total

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Allegis Group’s Global Workforce Trends report provides a snapshot of other countries around the world, sharing notable trends influencing the talent landscape and insight from workforce strategy experts. Download your free copy today.