Job hopping rampant as skilled workers chased
(Sunday Times)
Updated: 2006-02-22 15:59

On the day after the weeklong Chinese New Year holiday, Zhu Aihua went back to work to find that seven desks around hers had been emptied.

Students apply for jobs at a job fair in Xi'an, Northwest China's Shaanxi Province, displaying 8,000 vacancies from companies across the country, November 14, 2004. [newsphoto]

Her colleagues at an Internet company in Guangzhou had removed their tea mugs, pictures and other personal belongings. They hadn't taken an extended vacation. They had bolted.

"It's like this every year," said Zhu, 25, a marketing specialist. Then she glumly added, "I will have more work."

Similar scenes are playing out at workplaces across China, which is in the throes of a job-hopping crisis. Amid booming economic growth and an erosion of traditional values, this land of the socialist "iron rice bowl" — where people once served their state-owned employers until death — has become a revolving-door society.

China's overall turnover rate jumped to a record 14% last year from 8% in 2000, according to a survey by consulting firm Hewitt Associates. That doesn't include people who were terminated. The current turnover rate in the United States is about 3%, including firings.

In bustling areas such as Shanghai and Guangdong province, many companies lose 1 out of 3 employees every year.

Experts say a shortage of skilled workers is the underlying cause of the high turnover and its effects: large salary increases and extensive poaching of high-performing employees.

Turnover is particularly rampant among urban China's youngest workers, who grew up in a generation when Beijing allowed only one child per family. These workers, in their early and mid-20s, enjoyed more prosperity and have higher expectations of what employers and life should offer.

Government researchers say a record 4 million graduates will be entering the job market this year.

"Young people just cannot calm their hearts," said Cui Yixiong, general manager of City Supermarket, a private chain. Cui says more than half of his new recruits don't last a year on the job.

"When I was young, I believed it took at least three years for you to learn one industry thoroughly," said Cui, 39, who has spent his entire career in the retail food sector, including 11 years at City Supermarket. "Nowadays many young people will quit if they aren't promoted after one year's work."

That has driven up costs for employers, disrupted business and contributed to wage increases. For higher-skilled jobs, companies have started offering some of the same carrots as in the West: stock options, retention bonuses and housing allowances.

Still, many young workers blame employers for the high turnover rates, saying they don't do enough to retain employees. Benefits such as medical insurance and pension plans tend to be similar from one workplace to the next. Training programs aren't common, they say, and many companies don't offer opportunities for advancement.

"What do you expect from workers?" asked Jiang Ning, 24, a business analyst at Ping An of China, a state-owned insurer. "Companies haven't shown their loyalty to employees."

Jiang graduated from prestigious Fudan University in Shanghai in July 2003 and has been job-hopping since. He quit his first job, at a large French electronics manufacturer, after five months because the company wanted to transfer him to Beijing. Ping says his second employer, a small German consulting business, pushed him too hard. He lasted nine months in that job.

Koko Hu, 24, of Shanghai had a different reason for leaving her last job, her fourth in three years. She wanted to travel around the country with her boyfriend, and the national Chinese New Year holiday this month wasn't long enough. So before the start of the weeklong festivities, the clothing designer wrote a letter to her boss saying she wasn't coming back.

Hu had been on the job for only a few months and was on an interim salary of about $350 a month.

"Since I didn't sign an employment contract with them, I can leave anytime," she said. Many workers in China sign one or two-year contracts and can face fines from employers if they leave their jobs without a month's notice.

Job hopping also is high in rapidly developing economies such as India, and it was widespread in the West in places such as Silicon Valley during the boom years in the late 1990s.

But China's turnover crosses industry lines as well as job and pay classifications, thanks to the sweeping changes in the demographics and economy of China. Millions of migrants are pouring into cities to work at factories that seem to pop up or disappear overnight.

New industries and globally ambitious companies have created a huge demand for skilled workers and experienced managers.

For company managers, the worst time is around the Chinese New Year, when most workers receive their annual bonus, which can be several times their monthly salary. Some will bolt if they're dissatisfied with their 13-month pay, as it is called. Others who plan to leave anyway will hold on just long enough to take the bonus and run.

At Homemart Decoration Co., a national retail chain, Chief Financial Officer Sun Bing said he took the departures in stride partly because there were plenty of workers ready to fill vacancies.

"If someone in an important position wants to leave and we spent a lot of time training him, we would try to persuade him otherwise," Sun said. "But if he doesn't change his mind, then let's just say, 'Hao he, hao san,' " a Chinese phrase that means, "Merrily meet, merrily depart."

Experts say China is going through what other Asian economies such as South Korea went through when they saw a burst of job opportunities and galloping salary increases.

Hewitt's latest attrition study found one striking difference between China and other Asian nations: Money was the primary factor in prompting Chinese workers to switch jobs, whereas career opportunities and work processes were more important to other Asian employees.

"A lot of employees just see what they get out of their ATM every month," said Jihann Moreno, Hewitt's marketing manager for China.

Lu Le makes no apologies for that. The 24-year-old Web designer has changed jobs six times in three years, boosting her salary an average of $100 a month each time. The Shanghai woman now earns almost $700 a month, double the average for the city. Lu has been at her job for six months and is contemplating another move.

Chen Wei, product manager at Xiangcai Securities, calls people like Lu "professional job jumpers."

There's no shortage of them at his firm, where a third of the employees leave for other jobs each year.

"Sure, it brings extra cost to our company," he said. The trick is to keep the best employees around long enough, he said, adding that workers tend to settle down after they pass 30 years of age.

Some companies are turning to headhunters to do the dirty work.

Jin Yun of Beijing, who started one of China's first headhunter firms, recalled how his staff targeted one high-performing salesman by repeatedly calling and writing letters. It took nearly a year before he jumped to a rival firm.

"It's like arranging dates and helping boys chase girls," Jin said of his work.

Jin and others think that the massive job hopping and poaching will slow as companies do more to retain employees.

China's job market should even out in three to five years, said Charles Tseng, head of the Asian operations of Korn/Ferry International, a recruitment firm based in Los Angeles.

"We don't see China being particularly different than the North American model," he said.

Others, however, aren't so sure.

"To their parents who were born before or during the Cultural Revolution, they valued social position and family responsibility greatly, and they couldn't imagine losing their jobs, " said Lu Qiang, head of Mercer Human Resource Consulting's Shanghai office, referring to the period in the 1960s and 1970s characterized by purges of intellectuals and criticism of so-called bourgeois values.

"For them it was an honor to work where they were needed and a great shame to be jobless," Lu said. "But their children are in a different world. They may work in a position very hard this month and quit next month to have fun or rest without worrying that much."

Rick Dyck, an American technology entrepreneur with plants in Japan, South Korea and China, said he struggled with this issue in employee relations.

"In Japan and Korea, you can appeal to an employee with a known value system" when talking about workers' allegiance to their employer, said Dyck, who lives in Japan. But, he said, young Chinese workers' values are not so easily identifiable.

At the same time, Dyck observes that foreign companies, more than in other countries, have had a direct hand in China's economic development. And many of them, he says, have invested in China simply for the cheap labor, often with local Chinese governments providing the land and even building factories for them. Although it's easy to invest in China, it's just as easy to pick up and leave.

"Everybody talks about employees moving and suddenly quitting," Dyck said. "On the other hand, companies have done some of the same things."