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By Lin Zeyan

Research Report No 173, 2006

Entrusted by the Human Resources Bureau of the Organization Department of the Central Committee of the Communist Party of China, the Human Resources Research and Training Center of the Development Research Center of the State Council conducted a sample questionnaire survey over the current state of corporate human resources[1] development and the related policies. With the strong support of the human resources divisions of the organization departments of the CPC provincial (municipal) committees across the country, the survey covered nearly 10,000 enterprises and 60,000 people in all 31 provinces and municipalities. In addition, several corporate and expert panel discussions were held.

I. Two Central Issues Deserving Attention in Corporate Human Resources Development

With the establishment of a socialist market economy and the intensification of market competition, the Party and state have paid high attention to human resources development. While the strategy of "building the nation through human resources development" was introduced, diverse and wide-ranging policies on corporate human resources development were also worked out one after another. As a result, the development of corporate human resources has been strengthened and a contingent of career and professional corporate personnel has preliminarily been trained. Statistics indicate that nationwide, there are 17.703 million people specialized in corporate operation and management, an increase of 8.945 million than that of 2000. While most of them are young and middle-aged, their overall qualifications are visibly higher. 61.9 percent of the operational and managerial personnel of the state-owned enterprises have received college or above education, which is 25.8 percentage points higher than in 2000. The percentage is 46.5 percent for the operational and managerial personnel of the non-state-owned enterprises, 12.9 percentage points higher than that of 2000. In light of the needs of the EleventhFive-Year Plan and corporate development, there are two issues that deserve urgent attention in developing corporate human resources.

1. The "double-track" system for human resources development has led to an aggregate shortage in corporate human resources and a serious imbalance in thehuman resources structure

Compared with the demand of the ongoing industrial restructuring, the change in the mode of economic growth and the corporate development and innovation, human resources are grossly insufficient for enterprises and especially for industrial enterprises and the quality of human resources also needs to be heightened urgently. According to the results of the 2005 China Economic Census, the 12 sectors where more than 60 out of 100 people have received college or above education are all in the tertiary industry, including the Party and government organs and the financial and insurance sectors. The 19 sectors where less than 10 out of 100 people have received college or above education are all in the mining and simple manufacturing industries. The McKinsey & Company discovered in its survey that if some Chinese companies want to go to the international market in the next 10-15 years, they need at least 75,000 experienced senior operational and managerial personnel. But currently, only about 3,000 – 5,000 people can meet this requirement. In addition, only more than 40 percent of the 5,000 Chinese CEOs have received university education and only 20 percent of them have received academic degrees in management. What is more noteworthy is that some of the Chinese corporate operational and managerial personnel base their decision-making on intuition or hearsays, instead of scientific data analyses.

In some industries and regions, human resources are overused, over-consumed or wasted, though to different degrees. The structure of human resources is seriously unbalanced between different regions, different industries and enterprises of different nature. Survey indicates that human resources have been draining from state-owned enterprises to non-state-owned enterprises year by year. Compared with the tertiary industry, both the aggregate amount and the quality of the human resources in the secondary industry are relatively low, which is detrimental to industrial upgrading. In the tertiary industry, the relative economic contribution of the human resources is fairly low though the total number of employed people is on the rise. In terms of regional distribution, corporate human resources are "strong in east and weak in west" and "good in east and poor in west". In terms of the distribution of operational and managerial personnel, the state-owned enterprises are mostly in six sectors: manufacturing; finance;transportation, warehousing and postal service; construction; mining; and wholesale and retail. Most of the non-state-owned enterprises are in three sectors: manufacturing, construction, and wholesale and retail, accounting for 79.6 percent of the total. And they are mostly in Shanghai and Jiangsu, Zhejiang, Shandong and Guangdong Provinces. The five places have a total of 6.723 million operational and managerial personnel, accounting for 55.7 percent of all the operational and managerial personnel employed by the non-state-owned enterprises.

There are two main reasons for this aggregate shortage, low quality and unbalanced structure of corporate human resources. One is the deep-rooted influence of the traditional ideas such as that "official rank is taken as the only criterion for judging one’s social worth" and that "those who work with their brains rule and those who work with their hands are ruled". A survey covering 4,000 households indicates that only 1 percent of the respondents are willing to become workers. In the top-down order of the frequencies of job intention, they are government organs, public institutions, monopoly enterprises, finance and insurance, and competitive enterprises. But the truly competitive and highly marketized enterprises also find it hard to find or retain the personnel they need. Two is the absence of the market-oriented reform of human resources development and the unsoundness of the related systems. There has been a "double-track" system for human resources development between government organs, public institutions and enterprises. In other words, those employed in government organs and public institutions feel less risky, more secure and more socially respected, while those employed in enterprises and especially in highly marketized and truly competitive enterprises feel more risky, less secure and less socially respected. For example, the government organs and public institutions implement the highly secure "employment and retirement systems" while the highly marketized enterprises follow the "employment and endowment insurance systems". In comparison, those employed in enterprises have a fairly large expectation gap between employment income and retirement income. For this reason, most job-seekers prefer the positions that offer lifetime security, power, fame, gain and less career risk to the skill-required posts and corporate positions.

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[1]According to the indicator system for human resources statistics issued by the Organization Department of the CPC Central Committee, the corporate human resources in this report refer to the corporate operational and managerial personnel (including entrepreneurs and career managers), the corporate professional and technical personnel and the highly skilled personnel.