Business / Economy

Rising costs push companies to hire temporary staff

By Shi Jing (China Daily) Updated: 2016-02-03 09:37

The United States leads in flexible staffing with more than 2 percent of the working population working as temps. Japan and the United Kingdom are next to the US.

In this context, China's labor market is not yet considered as mature as those in developed economies. Yet the increasing labor cost has boosted demand for flexible staffing.

The China Entrepreneurs Survey System's data showed in November that 54.7 percent of the Chinese company managers polled think social security fees and taxes placed a huge burden on them. And 71.9 believed the labor cost has been increasing too rapidly.

Social security fees accounted for about 30 percent of the companies' operations cost, which has been increasing by 10 percent annually due to the rise in salaries every year.

According to Wang Guisheng, managing director of the China unit of Randstad, the world's leading staffing company, flexible staffing has become the second-fastest growing business for the firm in the past few years, next only to headhunting.

So much so that some staffing firms have even launched new apps like Yigongbao for flexible staffing services. "Jobs offered on our platform are not of high-end variety though," said Liu.

Yet, by December-end-that is, in four months-more than 10,000 jobseekers had used Yigongbao to land temp jobs. Well-known companies such as MUJI, Fancl and Uber place job ads for temp staff on the app.

Liu's startup is striving to supply 10,000 temp staff per day to companies and receive series A financing by the end of this year.

Flexible staffing solutions generate a 10-20 percent profit margin for hiring firms, higher than the 1-5 percent profit margin for traditional HR agencies, she said.

Wouldn't temp hiring affect the social security system?

"Most Chinese people can't accept this kind of work system. Flexible staffing accounts for only a small proportion of the working population even in developed countries. So such worries are misplaced," said Liu.

In Europe, the US and Singapore, flexible staffing is in huge demand because it provides a lot of flexibility for employers, said Rio Goh, managing director of the China unit of Morgan McKinley, a global recruitment specialist. For employees, it is very enriching because they can work for one company for a certain period of time and get enough exposure, especially at the interim management level.

But in China, people like to have employment security by way of binding contracts. Top-notch talents are unlikely to accept a one- to six-month job contract, he said.

"Not all companies understand the concept of flexible staffing. For some, flexible staffing usually means hiring a receptionist for a six-month tenure or to cover maternity leave. When someone reaches the middle management level or above, the company won't replace him or her with an interim manager. But in developed markets, that is a very common practice," Goh said.

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