While the talent shortage is expected to be most acute for highly skilled professionals in sectors such as chemicals, pharmaceuticals and financial services, Chinese export-related companies face a severe shortage of factory workers.

Analysts say an ageing population, declining birth rates, diminishing company loyalty, a lack of accountability for job-hopping and growing investment in China are contributing to a tighter labour market. There is some evidence that local companies are increasingly poaching trained staff from multinationals.

Labour market experts say financial firms are concerned that a long-term talent shortage could hurt business plans, particularly as the local market becomes increasingly appealing. Banks are also concerned about attracting talent as big local institutions begin to look and feel much more like foreign rivals.
Such opportunity in the marketplace means that we are likely to see an increase in the already high levels of employee turnover or “job-hopping” as candidates take advantage of the opportunity of increase their salaries levels by changing employers and the social stigma that may be perceived to be attached to such activity diminishes.

Experts say a shortage of skilled workers is the underlying cause of the high turnover and its effects: large salary increases and extensive poaching of high-performing employees.

Turnover is particularly rampant among urban China's youngest workers, who grew up in a generation when Beijing allowed only one child per family. These workers, in their early and mid-20s, enjoyed more prosperity and have higher expectations of what employers and life should offer.

Such rampant turnover, has driven up costs for employers, disrupted business and contributed to wage increases. For higher-skilled jobs, companies have started offering some of the same carrots as in the West: stock options, retention bonuses and housing allowances.

Still, many young workers blame employers for the high turnover rates, saying they don't do enough to retain employees. Benefits such as medical insurance and pension plans tend to be similar from one workplace to the next. Training programs aren't common, they say, and many companies don't offer opportunities for advancement. “Let’s face it, if a competitor is offering you a better deal, you take it, who wouldn’t?”

Oliver Draper, A director at Consult Group one of Asia’s leading recruitment firms says, “employer loyalty has almost non-existent in China over the boom years, although notably turnover appeared to diminish during the recent downturn. It’s not uncommon to receive a resume an see that a candidate’s average tenure with an employer is less than two years. Some senior candidates with roughly fifteen years of working experience could easily have had more than seven, even eight, separate employers. To put it simply, it’s a candidate’s marketplace at the moment where strong employees are in high demand and can command packages far in excess of national averages. Leading companies work extremely hard in the area of employee retention, introducing comprehensive benefits, incentives and inducements and dedicated employee relations functions; however, this can still not be enough. I don’t see this changing until China’s growth cools considerably and while there may be temporary pauses and downwards blips on the graph, this is something I don’t see happening in the foreseeable future.”

For company managers, the worst time is around the Chinese New Year, when most workers receive their annual bonus, which can be several times their monthly salary. Some will bolt if they're dissatisfied with their 13-month pay, as it is called. Others who plan to leave anyway will hold on just long enough to take the bonus and run.

Hewitt's latest attrition study found one striking difference between China and other Asian nations: Money was the primary factor in prompting Chinese workers to switch jobs, whereas career opportunities and work processes were more important to other Asian employees. While many western hiring managers will have an expectation of employer loyalty, they will find that in China this is not a common occurrence. While in Europe or America an employee may have to put in that be extra just to keep their job, in China it’s the employer who has to put in that bit extra to retain their employees.