China has begun issuing a new form of fast-track, extended-stay visa for recipients of its “Certificate for Foreign High-end Talent,” the South China Morning Post reported last Thursday. The five- and ten-year multiple-entry visas are free, can be processed in as little as one day, and are also available to the spouses and children of certified “high-end” foreign talent. This marks a noteworthy departure from the country’s otherwise very tight controls on immigration and foreign workers:
According to government guidelines, high-end foreigners also refer to, among others, Nobel Prize winners, chief or deputy editors in Chinese state media, foreign coaches and players in national and provincial sports teams, postdoctoral students from world-class universities outside China, and foreigners who earn at least six times the average annual wage in China. The average annual income in Beijing in 2016 was 92,477 yuan (US$14,220), according to official statistics.
The visas are part of a top-down drive to make China a more attractive place to work and stay. In February 2016, the central government relaxed the country’s green card rules, extending eligibility for permanent residency to foreigners working in broader fields than just government departments or laboratories involved in “key national projects”.
Millions of college students are graduating from China’s universities this year into a slowing economy where job prospects and starting salaries are on the decline, Bloomberg reported recently:
Monthly salaries plummeted 16 percent to 4,014 yuan ($590) this year for a second-straight annual decline, data from recruitment site Zhaopin.com show. The Ministry of Education estimates that 7.95 million will graduate this year, almost the population of Switzerland. China is losing competitiveness in lower-end industries from textiles to furniture as wages and other costs surge. Policy makers’ efforts to offset that by shifting the economy toward higher-technology industries and services — from aircraft and robots to research and development — may get a boost from an army of highly educated and low-paid graduates.
In countries with aging populations, many working-age people are saddled with the burden of caring for elderly parents or other relatives, putting pressure on their employers to help ease that burden. While organizations are becoming more aware of how elder care responsibilities affect their employees and are looking at new ways to help employees cope, Starbucks is breaking new ground in this area with a generous new benefit for its employees in China: health insurance for their parents. Bloomberg reports:
The new policy is a response to traditional values in China, the company said, as children often care for their parents and grandparents in a society that doesn’t have a comprehensive safety net for the elderly. The plan, covering 30 critical illnesses and some surgeries, will be available starting in June, Executive Chairman Howard Schultz said.
“This is the first time we’ve done anything like this, and the reason for that is that it was clear there was an emotionally driven concern among partners about their ability to take care of their parents,” Schultz said in an interview in Beijing. “I heard firsthand very emotionally driven, tragic stories about what’s taking place with the parents who got sick, and many passed away.”
In Davos earlier this year, the World Economic Forum projected that labor market disruptions, chief among them automation, would wipe out over 5 million jobs in 15 leading economies within the next five years. While the “fourth industrial revolution” of robotics and AI stands to have a major impact on the entire world, it’s particularly concerning to Asian economies like China and India, which have leveraged their large populations and low labor costs into a bonanza of growth in recent years. As labor costs rise in China’s manufacturing economy, Chinese manufacturers are investing in automation while international manufacturers either automate their operations or “reshore” them to high-tech factories closer to home. India’s business process outsourcing companies will also have to adapt in an environment where once-outsourced activities are increasingly performed by machines—one of the rationales behind Prime Minister Narendra Modi’s effort to goose India’s output in high-skill manufacturing.
In a talk on extreme poverty at the Brookings Institution on Tuesday, World Bank president Jim Yong Kim warned that automation could have a devastating effect on the job market in India, China, and other developing economies. Quartz’s Suneera Tandon passes along the news:
Referring to research based on World Bank data, Kim said 69% of all jobs in India could be at risk because of automation. In China, this figure is expected to be around 77%. Although Kim did not give any details on when the switch to more automated jobs would take place, he indicated that the consequences would be dire.
“Now, if this is true, and if these countries are going to lose these many jobs, we then have to understand what paths to economic growth will be available for these countries and then adapt our approach to infrastructure accordingly,” he said.
For India, she adds, these dire predictions compound the challenges India’s manufacturing pivot already faces:
Shanghai Shipping Containers (anekoho/Shutterstock)
With CEB’s Global Talent Monitor, we have been tracking the expected annual compensation increase that employees in China are expecting per year. In the last several quarters, the average Chinese employee’s expectation about their annual raise has fallen below the global average. This evidence of a slowing labor market in China is reinforced by signs that unemployment and underemployment are higher than official figures indicate, Bloomberg reports:
While official jobless numbers haven’t budged, the underemployment rate has jumped to more than 5 percent from near zero in 2010, according to Bai Peiwei, an economics professor at Xiamen University. Bai estimates the rate may be 10 percent in industries with excess capacity, such as unprofitable steel mills and coal mines that have slashed pay, reduced shifts and required unpaid leave. Many state-owned firms battling overcapacity favor putting workers in a holding pattern to avoid mass layoffs that risk fueling social unrest. While that helps airbrush the appearance of duress, it also slows the shift of workers to services jobs, where labor demand remains more solid in China’s shifting economy.
As manufacturing employees in China agitate for higher wages and benefits, the Wall Street Journal reports that the Chinese government, which exerts a lot of influence over the economy, is struggling to strike a balance between appeasing workers’ demands and keeping labor costs low enough to discourage manufacturers from relocating to cheaper markets elsewhere in Asia:
Fearing more job losses, Beijing has urged local authorities to be “steady and cautious” about approving wage increases. Guangdong province responded with a two-year freeze on minimum wage increases in February. Yet at the same time, authorities are more strictly enforcing manufacturers’ payment of workers’ pension and other social-security benefits, highlighting the delicate balancing act that China’s central and local governments face as they seek to ease business costs while trying to avoid further social unrest that could undermine the Communist Party.
Upward wage pressure has also spurred a drive toward automation in Chinese manufacturing, as well as “reshoring” by American and European manufacturers. But there’s another, broader trend affecting the Chinese labor market: namely, the shift from manufacturing to services, which the Journal took a look at in January, when Beijing revealed that the service sector had accounted for slightly more than half of the economy last year. That sea change is bound to have effects on how (and how much) Chinese employees are rewarded. At the Harvard Business Review, David De Cremer and Jason D. Shaw explore what China’s managers need to know about successfully incenting service workers as opposed to manufacturing workers:
The increasing number of jobs that can be done remotely opens up a lot of possibilities for how (and where) employees are hired and managed. Some studies have found that workers who are allowed some flexibility and autonomy in terms of when and where they work are happier with their jobs and suffer less stress. Flexible work arrangements have also been proposed as a way to remedy gender inequality and close pay gaps. Skeptics, however, argue that remote workers are harder to manage and lose out on the intangible benefits of working with teammates in an office.
At Technology | Academics | Policy, Stanford economics professor Nicholas Bloom discusses an experiment he and some other researchers conducted on the effects of working from home, which offers lots of good news for proponents of remote work. Ctrip, China’s largest travel agency, had Bloom and his colleagues help design a nine-month randomized controlled trial to compare the performance of call center employees working from home four days a week against those who worked exclusively in the office—with no other differences in the employees’ tasks, workflow, or pay system:
We found several striking results. First, the performance of the home workers went up dramatically, increasing by 13% over the nine months of the experiment. This improvement came mainly from a 9% increase in the time worked during their shifts, due to reductions in breaks, time off and sick days. The remaining 4% improvement came from an increase in productivity per minute. The wages of the WFH group also rose by 9.9%, equivalent to about ¥250 ($40) extra a month from higher bonus payments. …