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What Incentives Are More Effective to Recruit Talented People?
Cities offer favorable policies to attract and retain talents
 NO. 46 NOVEMBER 16, 2017

(Li Shigong)

In April, Wuhan, capital of central China's Hubei Province, put forward a talent recruitment plan that includes 3,600 apartments with a minimum monthly rent of just 200 yuan ($30). Changsha, capital of neighboring Hunan Province, has promised to subsidize the housing of college graduates, who will receive 10,000-30,000 yuan ($1,509-4,527) to buy their first house in the city. Other provincial capitals such as Xi'an of Shaanxi Province have also followed suit to attract promising college graduates.

In October, the Wuhan Municipal Government issued an upgraded version of favorable policies for college graduates willing to stay in the city. Bachelor's degree holders younger than 40 can apply for permanent hukou (household registration), while master's degree and Ph.D holders are not restricted by age. The aim is to provide a simple and flexible hukou policy for college graduates.

In the coming five years, the city is to make it possible for college graduates who start their own business in Wuhan or work in local organizations and businesses to purchase houses at a price 20 percent lower than the market rate.

The most striking aspect of the new policy is a proposed minimum level of annual salary, to make sure that college graduates in Wuhan earn no less than those working in China's top-tier cities such as Beijing and Shanghai. The lowest levels stand at 40,000 yuan ($6,036) for junior college leavers, 50,000 yuan ($7,545) for bachelor's degree holders, 60,000 yuan ($9,054) for people who have master's degrees and 80,000 yuan ($12,072) for Ph.D holders, much higher than the monthly salary of 1,750 yuan ($264) for ordinary workers in the city.

This updated favorable policy package offered by Wuhan has attracted much attention across the nation, particularly from college students. Against the background of rocketing housing prices in megacities like Beijing and Shanghai, what Wuhan and some other second- and third-tier cities offer seems particularly alluring. Debate is heated over whether these incentives can really attract and, most importantly, retain talents.

Hu Xian (Hubei Daily): College students are the hope of a city, and to retain millions of college graduates will help build a young and skilled labor force. Either in developed coastal regions or in underdeveloped hinterlands, policies designed to attract talents are churned out. Wuhan is home to a large number of universities, including some prestigious ones. College students are a treasure that the city can tap into for its own development. However, for decades, there has been a brain drain from the city.

Statistics show that in 2016, 150,000 college graduates chose to work in Wuhan, which was a stark contrast to the huge number—1.3 million—of college students in 89 colleges and universities in the city. Most graduates went to the southeastern coastal regions for jobs. Take the 2016 statistics for example, less than half of all graduates chose to stay in Wuhan, and the proportion for those from prestigious universities was less than 30 percent.

Another challenge is that the number of excellent graduates who stay in Wuhan, either looking for jobs in local companies or starting up their own business, needs to be increased.

Why is it so difficult for Wuhan to retain college graduates? Obviously, low wage levels and lagging city development should take the bulk of responsibility. The exodus of high-quality talents makes it difficult for local companies to find high-caliber employees. Thus, in order to retain college graduates, Wuhan needs to adopt some "unusual" practices. Particularly, the city needs to help students with their salaries, housing and residence issues. Compared with coastal regions and even many other cities in central China, salary levels in Wuhan are low. It's great that Wuhan has canceled all thresholds for college graduates to live and work in the city. Wuhan is the first Chinese city to issue a proposed minimum level of annual salary for new college graduates. It's expected that about one third of college graduates in Wuhan will see their salaries rise as a result of this policy.

Rocketing housing prices in megacities throw college graduates into a dilemma. They can't immediately decide whether to go to these cities or stay in regions like Wuhan. Therefore, in order to retain these graduates, Wuhan must try its best to provide affordable houses for them.

According to the policy, the local government will not pay for the houses, or simply offer subsidies, but it will combine various measures which even include requiring real estate developers to lower profit margins. Anyway, the new policy will usher in a new era of innovation and development in Wuhan.

Xiong Bingqi (Beijing Youth Daily): As for Wuhan's favorable policies to attract new college graduates, the biggest challenge is how to fulfill the goal of the minimum salary level because this is not mandatory and employers thus have the final say.

If authorities impose the minimum salary standard on employers, without taking into account the actual performance and other realities of each company, they would seem to be trampling the companies' autonomy, which would in turn discourage them from employing more college graduates. This would make the minimum salary standard a completely empty promise.

Favorable policies adopted by governments in different provinces fully display their emphasis on and preference for college graduates, but they must be pragmatic when it comes to providing conditions that encourage them to stay in the respective cities.

The proposed minimum level of salary for college graduates issued by Wuhan is much better than the minimum wage standard of 1,750 yuan per month for ordinary workers in the city. In this sense, it is quite attractive for new college graduates. However, this is only a proposal, not the actual salaries offered by employers to college graduates. If employers refuse to offer such high salaries due to various reasons, college graduates have nowhere to turn. They are not empowered to force their employers to meet their requirements. For the companies and organizations that operate independently of the government, the authorities are not entitled to interfere with their business.

Therefore, in the final analysis, the key to attracting new college graduates is to improve local businesses' performance, so that they can afford to pay high salaries.

Rocketing housing prices in megacities are forcing college graduates to seek jobs in second- and third-tier cities, and this is a good opportunity for these smaller cities. However, young people often return to megacities after living for a while in smaller cities. The main reason is dissatisfaction with local work environment. They find lower-tier cities to be less fair than top-tier cities, or not so up to date or technologically advanced. Thus, apart from formulating favorable salary policies, local governments should also try to create a favorable environment for young people's career development, as should local businesses.

Wang Pinzhi (China Youth Daily): A recent survey by China Youth Daily of 2,002 new college graduates and undergraduates showed that of all the favorable policies designed to attract college graduates, what attracts them most are incentives for creating their own business (65.9 percent) and help with housing (64 percent). Of the interviewees, 59.9 percent hoped to see a more relaxed environment for startups.

Apart from a better economy and quality public services, a city's "soft power" stands out as an important element for college graduates as they decide whether to stay or leave.

Zhao Xi (Henan Daily): Behind the competition for talents are tightened hukou policies in megacities and the rise of lower-tier cities. It reflects a serious imbalance in talent distribution among these cities. Most college graduates choose to stay in big cities despite the fierce competition for job opportunities.

A city can anticipate a better future only when it is able to attract and retain talents. Apart from tangible support such as housing assistance and minimum salary standards, lower-tier cities should also try to improve their overall urban environment, governing abilities, education resources, industrial structure, etc. For excellent talents, housing, hukou and other such things probably are not the key; they value future development opportunities more.

Copyedited by Chris Surtees

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