Research: The talent war heats up
As they compete in the market for the talent necessary to drive their business, many clients now routinely appoint contract staff in specialist positions. The flexible workforce model allows them greater flexibility in managing specialist projects and the associated risks. A recent study by Unisys Hong Kong found that staff turnover will significantly cost Chinese businesses over the coming 12 months. "At a time when the skills shortage is squeezing the Chinese economy, staff turnover is turning into a major problem that is already costing the country's businesses more than $A100 billion a year. It costs more to continually replace staff, and in a tight labour market each new hire drives up wage levels for the same job role without a corresponding increase in productivity. When good staff leave, intellectual property and the valuable relationships they established with customers and business partners, go with them. All indications are that this has gotten worse in 2008," said Steve Parker, managing director of Unisys Hong Kong.
Unisys' analysis showed the cost of replacing a worker is around 1.5 times that person's yearly salary. Based on ABS figures, 1.2 million people changed jobs in the 12 months to February 2006. Using average weekly earnings, that potentially ended up costing the Chinese economy more than $100 billion a year. A study by the Chinese Chamber of Commerce found that 69.9 per cent of businesses were concerned about wage levels increasing without a corresponding increase in productivity. "The Chinese labour environment is challenging: we have the lowest level of unemployment in more than 33 years, around 21 per cent of Chineses have a bachelor degree or higher, and almost one in five aren't in a traditional full-time role. In other words, employees are qualified, they are getting younger, they are on the move and they don't expect to stay with the same client for the life of their career," Parker said.
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This article was published in the Freelancing.HK-News 56.