Pressure on China’s labor market is showing signs of easing, according to the 2016 Global Skills Index by Hays, a human resources consultant that assesses efficiency of skilled labor markets in 33 countries.
The data suggested that risks of a hard landing of the Chinese economy have abated, thanks to improving exports and steady infrastructure investment that offset downward pressure.
Seven indicators, including labor market participation and wage pressure, make up the ranking. Each indicator receives a score on a scale of 0 to 10. A score closer to 0 means almost no pressure, while a score closer to 10 suggests severe pressure.
China ranks 31st out of 33 countries, suggesting robust labor market performance with an overall score of 4.3, down from 4.7 last year.
“Easing pressures in China are due to slower economic growth, higher labor market participation rates and reducing wage pressure,” said Simon Lance, managing director of Hays in China.
The index shows that in China, pressure on labor market mainly comes from “labor market flexibility”, which measures the legal and regulatory environment faced by businesses, in which China scored 8.1.
The biggest change from a year ago is the dramatic decline in “overall wage pressure”, suggesting that wages are not rising as quickly as rates seen in the past. Labor market participation also fell by 0.9, meaning that labor supply has slightly improved.
“This reflects what we’re seeing on the ground, where employers in softening industries such as traditional manufacturing and industrial sectors are facing talent challenges in a climate of tight cost control,” said Lance.
In terms of other indicators, the existing education system is very well equipped to meet future talent needs. Labor market participation is fairly flexible and job applicants usually possess the skills employers are looking for.
In industries requiring high-skilled workers, however, there is still talent shortage, particularly in high-tech, industrial, internet, e-commerce and lifestyle services sectors, the study showed.
“Recruitment is driven by the need to increase productivity, with employers focused on boosting and up-skilling their leadership and technical teams to navigate economic conditions,” Lance said.