In spite of the over-supplied human resources market, foreign-funded
companies in Shanghai will continue raising salaries for their employees next
year, according to a recent research report.
New university graduates, if they can enter a foreign-funded company, can
also expect higher starting salaries, according to a compensation payment and
welfare report on foreign-funded enterprisesin Shanghai, released by the
State-run China International Intellectech Corp (CIIC) on Wednesday.
The report, based on a survey of human resource managers in about 300
foreign-funded companies, said that average salary growth at those companies is
expected to be 8.3 per cent, compared with 8.8 per cent this year.
However, CIIC's Senior Consultant Li Shuang said the figure is a conservative
prediction based on tight financial conditions.
"Actual figures for next year will be higher," she said.
European and American companies expect to see the highest growth in their
salary level at 8.9 per cent, leading 8.3 per cent in Japanese-funded companies
and 7.6 per cent in companies funded by other Asia-Pacific countries and
The high-tech sector leads all sectors in salary growth with an increase of
9.2 per cent, followed by the comprehensive trade sector, 8.8 per cent,and
manufacturing, 8.3 per cent, said the report.
"Human resource professionals have a new challenge next year: How do we
strike a good balance between controlling the fast-growing human resource costs
and keeping or attracting more essential talent for the company,"
Although Shanghai has a high jobless rate and an abundant supply of
university graduates, foreign-funded companies are still plagued by a lack of
skilled workers at all levels, said experts.
As a result of talent wars between companies, talented employees can expect
to leave a company at any time and receive any of a wide range of compensation
The report said salaries for new university graduates started at a higher
level in 2006 than the previous year.
Bachelor's degree holders saw the highest growth at 14 per cent, followed by
master's degree holders at 12 per cent, while PhD graduates' income rose 5 per
Salary increases for MBA students was the lowest at 0.1 per cent.
The survey also found that holders of a bachelor's or master's degree are
better treated in European and American companies, while PhD holders can be
better paid in Asian-funded companies.
The turnover rate in foreign-funded companies remained high this year at 15.1
per cent, compared with 15.2 per cent of last year.
Employees with European or American-funded enterprises seemed to be the most
loyal, with a turnover rate of 13.1 per cent.
In order to retain talent, human resource managers have started to pay more
attention to the motivation effect of variable incomes on employees.
Variable income refers to monthly and annual bonuses and other awards from
Companies also increased their contribution to the social welfare of their
For example, 18.7 per cent of companies surveyed have started to cover the
part of social insurance that were supposed to be borne by individuals.Companies
also spent more on training and financing education of their