Employers and skill shortages in China: Local labour markets and human resource management practices

Abstract

This thesis examines the experiences of foreign-invested enterprises (FIEs) in China facing prolonged shortages of skilled workers in their local labour markets (LLMs). It addresses four human resource management (HRM) areas relevant to the challenges skill shortages pose for employers and through which employers respond: the vocational education and training (VET) system; firm-level recruitment; workplace training; and employee retention. The research sites are three industrial parks in the highly developed Yangtze River Delta: in Shanghai, Suzhou and Wuxi. The thesis places the study of HRM firmly within the study of LLMs. It brings together those elements shaping LLM dynamics as well as firm-level labour supply and demand dynamics which, in turn, contribute to localized skill shortages. These themes and problems are greatly neglected in the literature, as is an LLM perspective used here. This thesis combines qualitative and quantitative approaches with a triangulated design. A survey of 218 FIEs across the three parks permitted descriptive and regression analysis of data and indicated significant differences regarding employers’ challenges and their responses across locations. Qualitative case studies of the three parks, and FIEs within each, facilitated more extensive explanation as to why and how these differences manifest in different LLMs. The findings demonstrate that employers adopt a range of responses that are by nature defensive and/or proactive. These responses operate within firms and employers also use them to interact with LLM institutions through choices to make, buy and/or collaborate. In these ways, employers use their HRM practices to link their internal labour markets and their LLMs. Engagement with LLM institutions is part of a broad process through which these FIEs in China explore and experiment, conduct substantial local learning and exercise their influence over the local environment. These processes have generated proactive initiatives to solve problems rather than just avoiding them. Finally, the survey and case study results together confirm that ‘location matters’ by demonstrating different patterns and magnitudes of LLM effects across locations and different ways in which firm-level HRM interacts with LLMs.