Concerns over skilled labour shortage surged, according to recent survey

Beijing -- Skilled labour shortage will intensify the payment stress for privately held businesses in mainland China and other emerging economies, probably to fuel inflation concerns in these markets, according to the Grant Thornton International Business Report 2011 (IBR).

The concern for skilled labours shortage is aggravating in mainland China, with 40% of the surveyed businesses expecting a lack of skilled labours a major issue constraining their ability to grow this year, up 17 percentage points over the previous year. By comparison, the report reveals that for other business constraints, mainland businesses’ concern remained at the level similar to that in last year(including cost of finance, shortage of working capital, shortage of long term finance, regulations/red tape, and shortage of orders/reduced demand), swaying within 5 percent approximately. Globally, the skilled worker shortage is now the most cited constraint on growth in emerging countries. The report suggests that 42% of businesses in the BRIC economies believe a lack of skilled labour will constrain their ability to grow this year. This is a 17 % upswing on 2010. Latin America shares the same concern, with 43% of businesses citing a lack of skilled labour as a constraint, an increase of 20 percentage points.

Xu Hua, Chairman of Grant Thornton Jingdu Tianhua, says, “The speeded economic growth results in a tight supply in labour market, where skilled workers are in great demand, but not in such abundant supply. The skilled labours shortage will cause wages to rise, pressing privately held businesses to increase employment costs. This in turn will inflate selling prices and observers will be looking to see the inflationary pressure it will create.”

Over six in ten businesses plan pay rise
The report reveals that 64% of suveyed businesses owners in mainland China plan to offer employees a pay rise in next twelve months, up 20 percentage points from last year. The expected pay hike generally jumps at the same speed with the flooding of skilled labour shortage concern. In the meantime, 11% of business owners expect to award pay rise above the inflation rate. Xu Hua says, the phenomenon indicates that the mainland businesses are doing accommodative adjustment in response to the gradual tightened labour market. He suggests businesses place emphasis on skilled workers training, whilst improve productive efficiency.

Business optimism in mainland China has surged to a balance of +58% in the first quarter of 2011,  approaching +60% a year ago, and representing a much brighter optimism outlook than a balance of +42% at the early beginning this year, according to latest finding of Grant Thornton’s IBR.