"Lewis turning point", breaking the truth of "labor shortage"?

The most important thing in China is people, but in the past six months, the "labor shortage" has frequently occupied the headlines of the media. There are reports that the number of workers in the Pearl River Delta has surged to 2 million, and the shortage of workers in the Yangtze River Delta has also exceeded one million. The two "big employers" are in a hurry, which makes enterprises across the country into anxiety. Guangdong even raised the minimum worker standard by 21.1%, which has been implemented since May 1 this year, in order to alleviate the problem of "difficulty in recruiting workers".

The "labor shortage" has been "shortage" since the beginning of the year, is it media hype or is it real? Where have all the migrant workers brothers who were carrying heavy bags or simple luggage in the train station and bus station in the past, who are full of hope to join the work boom, have gone? This issue has been discussed in depth by dialogues with corporate managers who have been on the front line all the year round and experts who have long been concerned about China's human resources trends.

“Labor shortage” will promote industrial upgrading

Guests: Zhang Pengfei, President of Shanghai Hongdi Logistics Co., Ltd.

Hongdi Logistics: The fastest growing third-party logistics service provider in China. Headquartered in Shanghai, it has an operating network throughout the country. More than 600 employees.

At present, there are many media reports on the issue of "labor shortage". As a manager, how do you view this issue?

Zhang: At present, the "labor shortage" that everyone is discussing is mainly focused on the difficulty of labor at the grassroots level. To be precise, it is difficult to employ repetitive labor. In my opinion, this actually marks that China's social and economic development has reached a certain height, and some low-value-added jobs in the past are no longer willing to do it.

At present, some companies have indeed caused some troubles when they are not ready, but I believe this is only a relatively prominent and obvious performance in the short term. In the long run, it should be a very good trend. For us Even something to celebrate. Especially in the context of global economic integration, this is a symbolic manifestation of the adjustment of the social division of labor system. Enterprises need to face up to this change and adapt to it.

You mentioned the problem of "labor shortage" because a lot of "repetitive labor" no one is willing to do. So how should this problem be solved?

Zhang: Actually, a lot of repetitive mechanical work can be accomplished with the improvement of equipment and technology. Correspondingly, those workers who were originally doing simple physical or mechanical work can be promoted to technicians who operate instruments and equipment. As a result, a greater sense of work achievement and satisfaction can be obtained, and self-worth can be gradually realized at work. Originally, in the process of upgrading technology and equipment, many companies took into account the cost of investment (for example, if he upgrades a piece of equipment, the cost of the company is allocated to a product every year, which may cost 20 yuan, and only 10 yuan for manual work), It will be reluctant to use automated equipment to do it, and instead use human sea tactics. This approach was feasible at a certain stage in the past, but with the progress of the times, such tactics are not only detrimental to the improvement and development of the company's own technology and equipment; in the long run, there will be contradictions sooner or later. In addition to technological improvement, the construction of spiritual civilization is also very important. The key is to respect and identify with workers, so that workers will have a sense of belonging and pride.

Specifically to Hongdi Logistics, have you encountered a labor gap and how to solve it?

Zhang: At the beginning of this year, we found that it was a little more difficult to recruit people for individual projects in the coastal area. However, because of the management system and corporate culture accumulated in the company for a long time, it has played a positive role in new and old employees. The Ministry of Resources has also made some corresponding adjustments and measures, so it is not a big problem and has not caused any negative impact.

What are the measures and adjustments?

Zhang: The labor-intensive nature of Hongdi Logistics is not particularly high, and it is somewhat different from those large enterprises that have to recruit thousands or tens of thousands of people. The gap is not that big, but from a management perspective, it is mainly for these A long-term, visible vision for grassroots job candidates.

Are there any other measures besides human resources?

Zhang: We have done a lot of system upgrades, including the transformation of automation equipment, and we have made some improvements. Many domestic enterprises have also begun to implement the SAP system (System application & products in data processing, one of the enterprise ERP systems), so that they can share information, and the information in various places can be shared in a timely manner, and many processing People with basic information will be relieved from busy information processing.

In addition, we have independent IT system developers, as well as our own independent supply chain management IT system. For example, the use of some automated assembly lines in the warehouse can prevent many workers from repeatedly searching in the warehouse. Goods can be found very quickly. Since we implemented this system, the efficiency has improved significantly, and the speed is 2-3 times of the original. That is to say, we can more than double the manpower in the process of warehouse picking.

The renewal of equipment or the adoption of new equipment will definitely increase the cost. How should this cost be absorbed? Is it possible to offset this cost by the profit or other benefits brought by the efficiency improvement?

Zhang: The management of our company has also discussed this issue. In terms of product cost alone, the increase in labor costs is actually a good phenomenon for the society, because the increase in labor wages adds value to products. The increase is not much. For example, the wages of workers were originally 2,000 yuan, but now they are increased to 3,000 yuan; for products, if they were originally sold for 2,000 yuan, as long as they are now sold for 2,100 yuan, it is possible to cover this part of the increase in workers' wages. . However, this part of the increased wages for workers has greatly increased their own purchasing power, which has greatly improved the purchasing power of the entire society. In fact, this is a very good move to promote the upgrading of products and promote the consumption of the whole society and economy.

"Labor shortage" is a media hype

Guests: Yan Yongping, General Manager of Guangzhou Weishi Electronics Co., Ltd. Rear view of traditional high-tech companies. More than 100 employees.

What do you think of the "labor shortage" that is currently hotly debated in the media?

Yan: First of all, last year's financial crisis caused many companies to close down and go bankrupt, creating a backlog of labor. These labor forces can meet the current labor demand, but some of them are in a wait-and-see state. At present, the issue of "labor shortage" is very hot, and it has something to do with the misleading of the media, because CCTV has been vigorously promoting the labor shortage since the beginning of the year. However, according to my observation, many people are looking for jobs, and some companies do have a shortage of labor, but it has not yet reached the level of "scarcity".

Why do you think this "employment gap" occurs?

Yan: One reason is that the quality and self-cultivation of the company's workers have improved, and at this time, the wage level should also be raised accordingly. However, many companies have not done so, and the wages of front-line workers are still at the original level. On the other hand, soaring prices and inflation, so front-line workers will consider the cost of going out to work, and some may choose to find employment nearby instead of leaving their hometown to work in labor-intensive places such as the Pearl River Delta or the Yangtze River Delta as before.

Have you encountered a "labor shortage" and how to solve it?

Yan: We have taken some measures this year, including a 17% salary increase for frontline employees. This can ensure the recruitment of high-quality employees, on the other hand, it is also conducive to the stability of the workforce. In addition, we have also improved the living and accommodation conditions of front-line workers, and guided them in corporate culture. We often organize some competitions or activities to enrich their spare time. Therefore, we did not encounter the problem of labor shortage this year. On the contrary, there were more applicants than before. We usually recruit 15 people for 10 people. At the same time, we will also encourage employees to make internal referrals. At present, 40% of our employees come through internal referrals, and the loyalty of this part is quite high.

Wages increase by 17%. The improvement of living and accommodation conditions will lead to an increase in costs. Will the profit growth of Dimension Vision keep up with this growth rate?

Yan: Actually, our profit has not increased by 17%, but I believe that these investments will bring us sustainable development. We call this investment in people, and it's a means of competition for us. If the company can recruit good employees, these good employees can produce good products, and the quality of the products will be stable, which will have a positive impact on the brand, which is an intangible return on investment.

What is the current employee turnover rate of Wei Shi? What do you think about this churn rate?

Yan: This year, it is around 3%, which is still a bit high. The normal level should be 1%. The reason for the high level is that we did not take measures at the end of last year, and many things were not done until the beginning of this year, which is relatively late. Of course, we didn't expect the news media to make this matter so serious that we, like many companies, were caught off guard.

Although "labor shortage" is largely a false proposition in your opinion, won't it appear in the future?

Yan: This problem will come sooner or later. Due to the development of society and the improvement of people's living standards, the requirements of the staff for the society will also increase accordingly. If their requirements are not met, a "labor shortage" will appear sooner or later.

In those days, companies in Taiwan and Hong Kong also encountered such problems, so many Hong Kong and Taiwan-funded companies came to the mainland to invest and build factories, because the labor force in the mainland was very abundant. At present, some domestic enterprises have transferred their production bases to places where labor is relatively cheap, such as Africa or Southeast Asia. But I don't think these are long-term solutions. It mainly depends on whether your company is competitive, whether your products have high added value, and whether your brand is well established. Some enterprises are not aware of this problem. Although the current labor shortage is not so serious, the "labor shortage" will definitely come later.

"Lewis Turning Point" has arrived

Guests for Dialogue: Zhang Yan, Hewitt Consulting Company Salary and Benefits Evaluation Consultant

It is reported that Hewitt once discussed the issue of "labor shortage" which is currently hotly debated by the media. A survey, what are the results of the survey, can you do a brief analysis?

Zhang: At the beginning of this year, Hewitt made statistics on the turnover rate of operation workers in the first quarter of 2010. A total of 179 companies participated. We found that South China has the highest turnover rate, and Chengdu-Chongqing has the lowest turnover rate. The peak of turnover in most regions and industries was concentrated in January and February 2010, that is, around the Spring Festival, and the turnover rate in March dropped; among them, the electronic and semiconductor industry had the highest monthly voluntary turnover rate; 89.2% of the survey Participating companies have recruitment plans in 2010. The average ratio of the number of operational workers to the total number of workers is above 20%, and that of skilled workers is basically between 10% and 20%.

What do you personally think about this issue?

Zhang: There have been multiple media reports recently that there are about 1 million migrant workers in Guangzhou and neighboring cities such as Dongguan, which have been the epicenter of China's export boom for the past three decades. According to the "2009 Migrant Workers Monitoring Survey Report" released by the National Bureau of Statistics, in 2009, the number of migrant workers in the eastern region dropped by 8.9%, especially in the Pearl River Delta region, which was 22.5% lower than in 2008. Countless production lines have been idled, construction sites have been shut down, and some employers have raised wages by more than 30%, but they still cannot attract enough job seekers. Not only that, inland cities such as Wuhan, Chongqing and other places also have a certain degree of labor shortage, especially the shortage of skilled workers. "Labor shortage" will become the norm.

Where are the migrant workers?

Zhang: I think there are many reasons. First, the "Lewis inflection point" may have come. After so many years of development, the supply and demand relationship of Chinese labor is slowly changing; secondly, the income of farmers in their hometowns has increased. In some places, farming has earned more than cleaning skyscraper windows. More; in addition, labor shortages in wealthy coastal regions such as the Yangtze River Delta and Pearl River Delta are particularly acute because of the construction boom and rapid economic growth in second-tier inland cities such as Chongqing, Wuhan, and Nanchang. Many migrant workers prefer to go to these places, where salaries are sometimes almost on par with Shanghai and closer to home.

Therefore, the most fundamental reason for the shortage of labor and rising wages in various parts of the country is that my country's macroeconomic fundamentals have changed. That is to say, the "Lewis turning point" is coming, and China's "demographic dividend" is about to dry up. The government's policy on agriculture, rural areas and rural areas and the development policy of the central and western regions played a boosting role.

What does the arrival of the Lewis turning point mean?

Zhang: The arrival of Lewis' point of view indicates that in the future, the supply of rural labor will be less and less, and due to the shortage of labor, it will lead to difficulty in recruiting and rising labor costs, making labor-intensive enterprises more and more profit margins The smaller, the survival is seriously tested.

my country is a typical labor-intensive country. Compared with the manufacturing bases of major industrial products in the world, there is still a considerable gap. Strictly speaking, most labor-intensive enterprises are at best a "production workshop" in the global industrial chain of multinational companies, and most industries are still at the low end, at the end of the value chain, with low added value. So fundamentally speaking, it is still necessary to change the growth mode. Without changing the growth mode, it is impossible to cure the root cause.

When "labor shortages" become the norm and labor costs are inevitably rising year by year, how can companies ensure their profit margins?

Zhang: First of all, we must change our minds. Many senior executives of the company believe that raising wages will significantly reduce the company's profits. In fact, many times executives only see those tangible costs. There is a link between the direct cost of employee wages and the cost of worker turnover. Many people know that high turnover rates cost companies, but few people know exactly how much. Hewitt once made a data model to specifically quantify the economic losses caused by employee turnover.

We have quantified the factors related to employee turnover, such as recruitment cost, communication cost, training cost, production loss cost, and dismissal cost through the average level of the market. It was found that for a high-tech non-production enterprise with 2,000 employees, we conservatively estimate the personnel turnover cost to be RMB 29.3 million per year. A 1/3 reduction in the turnover rate is equivalent to a cost reduction of 19.5 million RMB/year.

In addition, the improvement of salaries and benefits and employment competition have led to a significant increase in employee engagement, which in turn has greatly improved the production efficiency of the enterprise, thereby improving the business performance of the enterprise. According to Hewitt's tracking survey of enterprise employee engagement over the years, it is found that highly engaged employees will jump out of the normal mode to perform and do more than expected. Businesses with engagement ratings above 60% consistently have better business performance. Engagement ratings below 25% begin to gradually damage the ability of a business to operate.

Glossary

The Lewis Turning Point: Nobel Laureate in Economics, a leading figure in development economics, economist W. Arthur Lewis published in 1968 A paper entitled "Economic Development under the Conditions of Unlimited Labor Supply". In this paper, Lewis proposed a "dual economy" development model.

This model is divided into two stages: one is the stage of unlimited supply of labor, when there is a surplus of labor, and wages depend on the value of the means of subsistence needed to sustain life; the second is the stage of labor shortage, when labor in the traditional agricultural sector is Surplus labor is absorbed by the modern industrial sector, and wages depend on the marginal productivity of labor. Economics refers to the intersection between the first and second stages as the "Lewis turning point".

Demographic dividend: refers to a country's working-age population accounts for a large proportion of the total population, and the dependency ratio is relatively low, creating favorable demographic conditions for economic development, and the entire country's economy has become a situation of high savings, high investment and high growth . According to estimates, 27% of my country's GDP growth in the process of reform and opening up came from the demographic dividend. What is worrying is that China's total population dependency ratio reached an inflection point in 2010. Since then, the dependency burden on the labor force has increased year by year, which will undoubtedly reduce the potential for economic growth.