Chinese employees vote with their feet – the WTO column

(later also in Chinabiz)

Nothing can inspire me more than a decent piece of propaganda. The Chinese state news agency Xinhua made it this week very easy when they loudly proclaimed that 90 percent of the overseas students wish to return to the motherland. There was even a rather scientific survey to support the claim.
There is no reason to have any doubt about that figure, but what made the article very fishy was that an even more important figure was lacking. How many are actually coming back? According to my unscientific estimation that figure might be well under those 90 percent.

Very little solid information is available on what is actually happening on the very diverse Chinese labor market. Most figures that are available are financially out of reach for most companies and all employees. Those figures tend to offer also a fairly general picture, very seldom of practical use when you have to hire a supervisor in Shenzhen or a marketing manager in Shanghai.
That lack of data used to be a limited problem, since with very few exceptions the labor market in China was a buyers’ market. Wages did not go up dramatically, and seemed to be rather stagnant over almost the whole line, sometimes even declining. But things are changing in certain markets and perhaps the trend in that process can give an idea about what might happen in the future as qualified labor is becoming scarcer as the economy keeps on growing.
As solid data are lacking and employees are not represented in a useful way, Chinese employees vote with their feet.
Last year I was asked by one of the better academic institutions in China for some ideas on how regional governments could predict trends in employment. I could not imagine such a tool, apart from what we would call with a broad term a civil society. I told them they do not need a tool, but a marketplace, at least on industry-level, for representatives of both employers and employees to negotiate. They were looking for a more scientific solution of this problem, but I do fear that those do not exist.

A few months ago I described how migrant workers in southern China started to vote with their feet, and increasingly decided to stay home to work in the booming agriculture. That trend expands, as examples in Shenzhen show. Better communication tools, like SMS and the internet, between groups of employees that are forbidden or otherwise unable to organize themselves, are supporting that trend.
MBA-graduates of the top-10 MBA-schools now follow the example of the migrant workers in Guangdong, when companies try to lure them back to China. According to recent research their global job chances are picking up very fast, while compensation in China is lagging, on average one third of what they would get in the US, Europe and Australia. Over the past six month an increasing number of those well-connected MBA-graduates have refused job offers, not because they did not want to come back to China, but because those offers were not competitive. They also voted with their feet.
Companies now have to decide whether they should go down the food chain, where competition among graduates of the lower ranked MBA-schools is still fierce, or offer a competitive package.
The move by the presumed-dead Chinese trade union to force Wal-Mart to set up union branches in their stores is a sign that also at top-level the need of making conciliatory noises to the work force is recognized. What a nice squeeze that could be, grass root unrest and a supportive top-down movement.