Both employee turnover rate and salaries have risen in Guangzhou, capital of southern China's Guangdong Province, at a time when the local human resource (HR) market continues to be highly competitive.

This was unveiled yesterday by International HR consulting firm Hewitt Associates after its annual survey on compensation and benefits in the city.

A total of 290 companies, about 90 per cent of which were foreign-invested firms, took part in the survey.

Employee turnover rate in the non-manufacturing sector in Guangzhou has risen from 11.4 per cent last year to 14.6 per cent this year, according to Hewitt.

The rate in the manufacturing sector has grown to 13.4 per cent from 10.7 per cent.

At the same time, the average turnover rate in China has increased from 8.3 per cent in 2001 to 14 per cent this year.

The highest turnover rates in the non-manufacturing sector, which considers the areas of marketing, human resources, sales, finance as well as research and development (R&D), ranged from 13.4 per cent to 21.5 per cent. This is largely in line with the situation in the entire country.

The most serious specialist shortages in Guangzhou exist for top management and senior professional positions.

Salaries have been rising across the board in Guangzhou, with the fastest raises seen for senior professionals and managers, or 8.4 per cent and 8.2 per cent annual increases respectively.

"Simply having a presence in China no longer presents a competitive advantage for multinational companies (MNCs)," said Jean Lin, head of compensation and benefits consulting for Hewitt Associates in China.

It is important for MNCs to integrate human resource policies and practices in their overall business plans, Lin said.

As the market for talented professionals will continue to be highly competitive, companies must offer competitive remuneration packages, that take into account both payments and benefits, Hewitt suggests.

Greater emphasis should be placed on retention-based schemes, typically in deferred cash.

The survey also revealed that pension schemes are receiving more attention because of demographic and regulatory changes.

Supplementary medical and insurance plans are at a significant level in the market and there is a trend towards greater flexibility in benefit schemes.

(China Daily September 28, 2005)