The US-China trade war became a force to reckon with in 2019. Its ripple effect was seen on various economies, with political and economic uncertainty becoming the flavour of 2019. 2020 is expected to be a “year of gaining stability” with a slightly higher GDP-growth prediction i.e. 2.5 percent in 2020 from 2.4 percent in 2019.  APAC seems to be equally sombre, with APAC GDP growth expected to drop to 5.7 percent in 2020, from 5.8 percent in 2019. 

Within China, growth has decelerated more than expected, owing to lax domestic demand, and heightened international tensions. Investor sentiment was negative through 2019, especially in the second half. The higher tariffs of trade with the United States led to a contraction in exports to the US, and industrial production growth reached multiyear lows. As a response mechanism, monetary policy was made more accommodative, and fiscal measures such as tax cuts and support for local governments for public investment was introduced. However, tighter regulatory norms to reduce non-bank lending continues, and total debt has surpassed 260 percent of China’s GDP. After decelerating to an estimated 6.1 percent in 2019, growth is expected to moderate to 5.9 percent in 2020 and 5.8 percent in 2021. With no immediate resolution of the trade tensions in sight, the negative sentiment is expected to continue into 2020, at least for the first half. China is now seen to turn inwards i.e. by spurring domestic consumption to drive economic growth.

Hong Kong, despite being impacted by the economic factors, is still considered a global business and finance hub. Financial services saw a futuristic shift, with the issue of eight virtual banking licences. This had, and would continue to have a significant impact on the skill demand and supply dynamics. 

Talent challenges in China

China has traditional economic-talent challenges such as a very low young population, high number of dependents on earning members, and an inherent shortage of skilled talent. Mainland China has always endeavoured to be the leading authority of quality, innovation and new technology.  Accordingly, 2019 saw demand for talent in key growth areas such as the technology industry. However, overall the hiring sentiment stayed low, at both employer and employee end. Professionals were reluctant to switch roles due to uncertainties. Employers struggled to source technology-talent, due to the highly skilled nature of the industry and its innovation-focus. Mainland China particularly saw a slowdown in manufacturing hiring. Companies adapted to this dismal outlook by using available free trade zones and the Belt & Road initiative to expand internationally. Public policy also was supportive towards internal growth, for example, the government announced its plan to turn Shenzhen into a model city and an international city of innovation by 2025. Hence, technical and business development skills and international exposure were in demand. R&D, Big Data and Artificial Intelligence were some of the hot skills in mainland China in 2019, and are expected to continue to gain importance in 2020 as well. 

Hong Kong, on a whole, saw a cautious hiring sentiment, especially for the trading and equity-related financial services positions. Exceptions were private banking and wealth management roles, and virtual banking and Fintech roles. Hong Kong has seen a rising demand for specialists in finance, legal, technology, risk and compliance, operational and HR roles. On the technology front, in-demand roles were in big data, innovation, artificial intelligence (AI) and the Internet of Things (IoT), software development, cloud computing, and digital transformation. In fact, these roles have been the primary hired roles in 2019, and are expected to be in demand through 2020 as well. 

Digital transformation shall continue to be the priority in 2020 in all of China, creating a sustained demand for analytics, big data, DevOps and digital specialists. 

Salary outlook for 2020: China

China can expect moderate salary hikes, making it imperative for companies to offer holistic employer value propositions such as clear career development paths, flexible working, etc. which are increasingly valued by employees. In Hong Kong, salary hikes for top performers switching jobs ranged between 10 percent to 15 percent, while niche skilled candidates could command a premium. 

Way Ahead: How can companies manage talent?

The private and public policy of China, coupled with shortage of local talent shall compel companies to explore new and unconventional talent pools. Plans such as Shenzhen becoming a model city of innovation can be realized only with high-tech focus, for which organizations must actively attract international talent from world over. Businesses must harness technology to cater to the highly demanding consumer market, which means that they must hire mobile payment, ecommerce, data and AI experts in 2020. This tech-talent must be balanced with business-focus. Business development and digital marketing candidates can add business value through their expertise in search engine marketing (SEM), analytics, content curation and social media skills. A distinct shift in hiring is that recruiters can no longer segregate business and technological prowess- they must source and select people with an amalgamation of technical and commercial awareness across various functions. Hiring for potential must be another key HR priority, employees must be able to step up to become strategic business partners. 

In Hong Kong, passive hiring presents a great opportunity-  92 percent of professionals in Hong Kong reported being open to a job approach when not actively looking. HR must innovate in talent sourcing- hiring managers must actively track passive talent pools and candidates, especially for niche skill sets. Recruiters in Hong Kong are expected to strengthen the hiring processes by adding additional interview stages, so as to bring in more rigor in candidate due-diligence. This is a direct outcome of the strengthening regulatory and compliance norms. 

2019 saw a significant shift towards contract hiring, in both Mainland China and Hong Kong. In 2020, organizations must continue to go agile and leverage a here-and-now workforce to grow on a needs-basis. Hong Kong companies operating in the realms of project management, data science and business analysis have already started increasing their contractual employment. 

HR must live and breathe the digital transformation and new ways of working. This means offering candidates what they really need- flexible working conditions, work-life balance and opportunities to fully participate through new technologies at the workplace. It starts with transforming HR from within, and is already happening. We shall see a greater demand for HR business partners with competence and exposure in transformation and employer branding. The hiring managers of the future, must be able to design and communicate the holistic Employer Value Proposition to candidates and employees. After all, the appeal of positive workplace culture, with flexible working arrangements and digital technologies at one’s fingertips is too attractive for modern talent to resist. 

Sources: World Bank Report, Robert Walters Report, & Hays