China Daily: Salary Growth In Asia Outpaces Talent Acquisition – Impact On The Hospitality Industry?

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This week, the China Daily (access online article here) wrote in it’s weekly ASEAN Edition about the rapid growth of salaries in Asia and the associated effects this has on the ability of companies to attract and retain employees.

China Daily JUL 10I have been to China during the last week and John was there a week earlier. We have already discussed the deteriorated staff performance at length and it seems like the author of the article comes to the same conclusion as we did. I’m traveling to mainland China for the 7th year now and noticed a steep decline in staff quality, not only in terms of communication abilities but also general common sense. I was shocked on this recent trip how drastically the employees differed from what used to be a great recruitment base 5 years or so ago.

For example, since my first trip to Beijing I frequently stay at the Park Hyatt Beijing in Chaoyang. At the beginning the hotel was simply fabulous, luxurious and only minor hiccups. Since then the trend only knows one direction and that is downwards. The staff changes so frequently that it becomes abhorrent. During my last visit I encountered at least 3 front line employees whose spoken english was rudimentary at best. The concierge mentioned with a straight face ‘The hotel doesn’t give receipts for left baggage’ and upon departure the Duty Manager even ordered a beverage for me which the restaurant staff promptly forgot.

A few days earlier I stayed at the Westin Chaoyang and the situation there was not much better. Absolutely nonsensical actions from the staff, english of certain front line employees rudimentary and the front desk staff not even knowing the name of the Front Office Manager whose name I wrote on an envelope.

A local friend told me that as soon as a Chinese employee can earn as little as 100 CNY more a month they will change jobs without much consideration even if it means changing from the Park Hyatt to a Motel 6 (in comparison). Some of the hotels and their ownership/management have simply not progressed with the dynamic that is taking place in China. They did not adjust wages or offer their employees attractive development opportunities.

China Daily writes about this in the referenced article:

Average salaries will rise 7.01 percent across the region this year, according to professional services firm Towers Watson’s latest budget planning salary report for 2015. That is higher than the 6.01 percent salary hikes predicted across the globe. …

Salary growth in Asia Pacific has significantly outperformed the rest of the world as developing countries in the region continue to expand at a rapid rate. …

“This has led to a shortage of talent in many areas, causing salaries to rise faster than inflation over the last few years.” …

In the Chinese mainland, for example, salary rates were once notably low but have been increasing steadily and irrevocably for the past two decades. And China, because of its size, is a major contributor to the average wage hikes across the region.

Wages in the Chinese mainland are expected to increase as much as 7.2 percent this year, according to Towers Watson. Mainland salaries are likely to continue rising in the foreseeable future, a reflection less of economic strength but of a need for more talent in a wide range of areas… “To protect their employees’ purchasing power, companies need to adjust payment according to inflation. To hedge the higher prices in many Asian countries, the increases in salaries have to be high.”

“The pressure is more acute in the white-collar work force, where niche industry knowledge or skill sets are a must and demand is growing more strongly than supply.” … “Retaining suitable talent becomes all the more important in light of the reliance on innovation for maintaining a competitive advantage in the market.”

Conclusion

If the hospitality industry in mainland China doesn’t begin to offer their employees competitive wages they will end up with an army of inept, human robots in an endless loop of recruiting, training and seeing the staff leave once they develop a skill set that allows them to find work in a more lucrative position either inside or outside of the industry. Keeping the employee happy, motivated and most of all loyal to their company is going to be a key challenge for employers in China.

In addition to that, healthcare and pension funds will become more and more an important factor in employment in mainland China where until now savings for old age were based on a ‘generational care’ system, a method which is more and more falling apart in the age of migration and modern family.

 

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