Overview:

In recent years, as population aging and childlessness continue to intensify, the lack of labor will be a major constraint on economic development in the future. According to the National Bureau of Statistics, in 2015, the proportion of China's population aged 65 and over was 10.5%, about 2 percentage points higher than the world average; the proportion of the population aged 14 and under was 16.5% during the same period, nearly 10 percentage points lower than the world average. The rapid decline in the young and strong labor force has already led to an obvious labor shortage problem in some cities, and the competition for talent among companies is intensifying.

According to the "Provisions on the Classification Standard for Small and Medium-sized Enterprises" jointly issued by the Ministry of Industry and Information Technology, the National Bureau of Statistics, the National Development and Reform Commission and the Ministry of Finance, small and medium-sized enterprises (SMEs) are categorized into those that are in different industries in terms of their assets, business revenues, and the number of people they employ. Taking the retail industry as an example: enterprises with less than 300 employees or operating revenues of less than $20,000,000 are categorized as MSMEs, of which enterprises with 50 or more employees and operating revenues of $5,000,000 or more are categorized as medium-sized enterprises, otherwise they are categorized as small and micro-enterprises. Based on this classification, the China Household Finance Survey and Research Center conducted for the first time a nationwide China

Micro and Small Enterprise Survey (China

Micro and Small Enterprise

Survey, CMES) targeting micro and small enterprise legal entities from July to September 2015, with samples covering 28 provinces ( The sample covers 28 provinces (excluding Xinjiang, Tibet, Qinghai, Hong Kong, Macao and Taiwan), 80 counties (districts, county-level cities) and 240 streets/townships, with more than 5,600 valid samples collected.

New first-tier cities have the lowest employee resignation rate

Small and micro-enterprises (legal entities), as a disadvantaged group in the competitive market, attracting excellent talents is a headache for many business owners. According to CMES, 38.4% of micro and small enterprises had recruitment difficulties in 2014. At the same time, ensuring the stability of talent is also a core element to maintain normal business operations, and the reality is that the turnover rate of talent in MSMEs is not low. According to the data, in 2014, the employee recruitment rate of small and micro enterprises is 19.7%, that is, about 20 out of 100 employees are new employees, and accompanied by a large number of employee resignation, the resignation rate of 13%, that is, 13 out of 100 employees resigned, and the two compared to only 7 people stayed in the enterprise.

According to CBN Weekly's categorization of major cities, compared with first-tier cities such as North, Shanghai, Guangzhou and Shenzhen, as well as second- and third-tier cities, the employee resignation rate of small and micro enterprises was the lowest among the 15 new first-tier cities, including Chengdu, Hangzhou, Wuhan, Tianjin, Nanjing, Chongqing, Xi'an, Changsha, Qingdao, Shenyang, Dalian, Xiamen, Suzhou, Ningbo, and Wuxi, with a rate of 11.6 percent, and both first-tier cities and second- and third-tier cities were in the lowest range, with 11.6 percent. cities and second- and third-tier cities are all above 13%. This may be due to the rising housing prices and cost of living in first-tier cities, which have caused a large number of laborers to flee from the north, Shanghai, Guangzhou and Shenzhen, and also reflects the rapid rise of new first-tier cities attracting talent, while second- and third-tier cities still show a continuous loss of talent due to the lack of good employment opportunities.

Moderate employee resignations reflect an effective match between supply and demand in the labor market, ensuring the retention of talent while also paying attention to the moderate survival of the fittest among employees.

On the one hand, a high resignation rate is not conducive to the stability of the production and operation of the enterprise. By comparing the profitability of micro and small enterprises under different levels of resignation rate, it can be found that in the micro and small enterprises with employee resignation, as the resignation rate rises, the profitability of micro and small enterprises gradually decreases. The micro and small enterprises with employee resignations are divided into four equal parts according to the order of resignation rate from low to high, in the lowest quartile of micro and small enterprises, profitable enterprises accounted for 55.7%; ranked in the middle of two-fourths and three-fourths of the micro and small enterprises, profitable enterprises accounted for 48.2% and 47.1% respectively; ranked in the highest quartile of the micro and small enterprises, profitable micro and small enterprises are the least, accounting for only 45.2%. The negative impact of the high resignation rate on MSMEs is also directly manifested in recruitment difficulties and talent risk issues. The resignation rate ranked in the highest quartile of micro and small enterprises, 53.4% face recruitment difficulties, higher than other enterprises; and with the resignation rate, there is a gradual increase in the talent risk of enterprises, resignation rate ranked in the highest quartile of micro and small enterprises, 19.3% that the quality of the existing staff can not meet the company's development needs.

On the other hand, the complete absence of employee resignations is not conducive to the realization of the optimal match between the quality of the staff and the needs of the enterprise, the staff may be content with the status quo thus inhibiting the improvement of labor productivity, not conducive to corporate profitability. According to the survey data, in 2014, 50.4% of micro and small enterprises did not have employee resignations, of which only 48.2% were profitable, about 8 percentage points lower than the profitability ratio of micro and small enterprises with the lowest resignation rate of 25%.

Reasons for mixed resignation rates in MSMEs

Why are employee resignations high in some MSMEs? And some micro and small enterprises did not occur employee resignation? The root cause is the two-way match between the quality of the staff and the remuneration package.

The different requirements for staff quality determine the differences in resignation rates between enterprises. Micro and small enterprises with high resignation rates prefer young people. The average age of employees in the 25% of enterprises with the highest resignation rate is 32.4 years old, which is lower than that of other enterprises. Although they are not necessarily highly educated, they can choose to leave the enterprise because they have an advantage in age and are still competitive in the labor market. In micro and small enterprises where no employees resigned, they can only choose to stay in the enterprise because they do not have an advantage in the labor market due to their age and lower education. According to the data, the average age of employees in this type of enterprises is 37.5 years old, which is higher than that of enterprises with employees who have resigned; the average education is 9.4 years, which is lower than that of enterprises with employees who have resigned.

Reasonable compensation and incentives are important factors in determining whether an employee stays or goes. Lower salaries and fewer promotion opportunities will prompt employees to resign. If we only consider micro and small enterprises with employee resignations, as the resignation rate rises, the level of salary and promotion opportunities gradually decline. Among the micro and small enterprises with employees quitting, the average monthly salary per employee and the average monthly salary per manager of the enterprises with the lowest 25% resignation rate are the highest, which are RMB 5418.1 and RMB 12347.6 respectively; while the average monthly salary per employee and the average monthly salary per manager of the enterprises with the highest 25% resignation rate are the lowest, which are RMB 3173.3 and RMB 7828.9 respectively. At the same time, enterprises with high resignation rates also provide fewer job promotion opportunities for their employees. Only 24.2% of the companies with the highest 25% resignation rate provided job promotion opportunities for their employees, while 33.4% of the companies with the lowest 25% resignation rate provided job promotion opportunities for their employees.

However, for small and micro enterprises where no employees resigned, they instead offered their employees somewhat competitive remuneration packages. The per capita monthly salary of ordinary employees in such enterprises is RMB 3,787.9, which is lower than those enterprises with the lowest 25% and 25%-50% resignation rates, but higher than those with the 50%-75% and the highest 25%; the per capita monthly salary of the management, although also lower, is still higher than those enterprises with the highest 25% resignation rates.

Combining the quality of employees and compensation incentives, we conclude that it is difficult to retain employees in companies with high resignation rates because of their preference for young people but their inability to offer attractive compensation and job advancement opportunities. As for the enterprises with no employee resignation, due to the poor quality of employees, but the salary is still reasonable, so the employees of such enterprises choose to stay in the enterprise, but it is not difficult to speculate that such a staff structure is very unfavorable to the development of the enterprise.