Contract employment is growing within the Asia Pacific region amid a robust hiring market in the first quarter of the year, according to the Morgan McKinley Asia Pacific Employment Monitor for Q1 2016.
The APAC region has been slower to embrace contract employment than other regions, but that has been changing rapidly. There were cultural differences towards views on contracting in APAC - a reputation of being second in prestige to permanent jobs - but people are now reassessing their attitudes, with professionals realizing that contracting can have many career benefits compared to a more traditional employment route.
For example, hitting the ground running is expected of a contractor upon starting a new role whereas a permanent hire can be allowed more of a leisurely start. This allows a contractor to gain more experience in a shorter period of time which can place them ahead of their peers when comparing CVs.
“The positives of contracting are now being embraced by job seekers for the flexibility and quick hiring processes involved,” says Andrew Evans, Chief Operating Officer, Morgan McKinley South Asia. “Projects are often on a fixed term contract basis, offering an ability to gain broad expertise in various roles, which is key to career success and progression in the current changing market.”
Robust hiring in Q1
Despite the poor end to 2015 and a shock start to January in the financial markets, employment figures for Asia Pacific in Q1 reflected robust growth, according to the Morgan McKinley Asia Pacific Employment Monitor for Q1 2016.
The number of professional positions available across the APAC region increased from 15,432 in Q4\ 2015 to 17,517 in Q1 2016, an increase of 14%. There was also an increase in professionals seeking new roles, with those actively looking for new positions numbering 61,864, an increase of 24% from 49,702 in Q4 2015.
“We are seeing things improving,” says Richie Holliday, Chief Operations Officer, Morgan McKinley for Asia-Pacific. “Two things explain these good numbers. Firstly, the bulk of bonuses for 2015 were paid out during this quarter, activating candidates who then were free to proceed with their job searches.
"Secondly, new 2016 headcount budgets will have come into account in this quarter, which has increased recruitment levels for those businesses operating a January-December hiring cycle.”
APAC data from Emolument also paints a similar positive picture. “We’ve seen base salaries increasing as much as 10-15% across the board in APAC in 2016 while they had been under pressure in 2015, when many mid-career professionals saw cuts in their compensation packages,” says Alice Leguay, COO of Emolument, the salary benchmarking tool.
Stable growth prediction
The previous APAC monitor predicted stable growth for 2016 and the results of the first quarter support this trend. Although there is overall growth, the industry is going through structural change with some areas and some traditional jobs disappearing and new jobs being created.
“Change is a constant,” says Holliday. “The organizations which are embracing change have the potential for sustainable growth.” Banks are increasingly moving towards more digitalised processes and client offerings, which is affecting hiring. “We’re seeing banks close down branches which is resulting in layoffs for some,” says Holliday. “At the same time, these same banks are often hiring aggressively in the digital and fintech areas.”
Digital experience and strong technology skills remain a hiring requirement throughout the region, whilst digital marketing skills are also emerging as a strong demand area.
The Hong Kong market has been hit hard by the equity market volatility in China and the rest of the world. In addition, a slowdown in investment banking business has resulted in many organizations pulling back from growing their locally-based headcount.
Brokerage firms have also been slowing, and in some instances freezing, their hiring and recruitment.
“The amount of work being loaded onto existing staff in Hong Kong remains high,” says Holliday “and the desire of the line manager to seek growth in their team to handle the volume is also there. However this has often not been reflected in head office sign-off: a larger than normal number of global players have been risk-averse and cautious in Q1 with their headcount.”
The Hong Kong financial market is facing demands from hedge funds and international investors to bring their rules more in line with Western markets. Investors are frustrated that trading in companies in Hong Kong can be suspended for prolonged periods, trapping investors in positions they cannot exit. This is of particular concern to hedge funds, which often short stocks.
The year started off poorly for China with equity markets moving into bear market territory. China’s central bank is attempting to keep the economy going and in February cut the amount of cash that banks have to hold in reserve. With the markets questioning the Chinese economy’s ability to keep growing, calls for reform are becoming louder.
Firms are facing significant challenges when it comes to hiring. Rising salaries are often pushing firms to hire temporary staff in an attempt to address immediate staffing needs but without loading in more fixed cost. In a bid to ease hiring, China is also now looking to relax foreign talent barriers.
“Whilst the question of a hard, or soft, landing in China - after many years of high growth - remains valid, we still see a strong, immediate need for multilingual and skilled talent on the ground,” says Holliday.
Another positive aspect was that gender equality in the workforce improved further. According to research by Grant Thornton, 30% of top positions in Chinese businesses are now held by women. This is an increase of 5% compared to the previous year.
“Female leaders seem to be more dedicated to driving their companies toward achieving goals, and appear to be more committed to their jobs,” said Xu Hua, CEO of Grant Thornton China.
After showing some signs of improvement in 2015, Japan again disappointed towards the end of the year, reporting a drop in GDP of 1.4% in the fourth quarter. Although the number of people in full-time employment grew for the first time in eight years by 260,000, the economy continues to struggle in finding any real positive traction.
A sign of this sluggishness has been an attempt to invigorate the economy by the Bank of Japan, in a decision to decrease interest rates into negative territory.
According to a Nikkei survey, Japanese firms remain optimistic in the face of adversity and are estimating a hiring increase of 10.7% of college graduates in spring of 2017. “Japan will remain flat, with mainly replacement hiring rather than aggressive growth,” says Holliday. “The economy continues to be sluggish. The government wants people to spend, but with increasing taxes and deflation that looks unlikely to happen soon, despite negative interest rates.”
The movement of professionals seeking new roles in Singapore is one to watch as we proceed into the second quarter.
“Q1 is when bonuses are paid out and this year Singapore did not see the same merry-go-round in candidates as in previous years with the number of job vacancies outnumbering the amount of job seekers. People seem more reluctant to look for new opportunities - they are staying where they are and are remaining cautious given the mixed opinions from those in the industry on what is in store for the rest of 2016,” says Evans.
“Private Banking and Wealth Management are the recruitment areas faring the best,” adds Evans. “Wealthy Asians are still looking for safe havens and Singapore is still a good place to go for asset and wealth management.”
What is most challenging is that employer confidence is still causing a delay in actual onboarding. Budgets are being signed off to hire, candidates are interviewed and taken to offer stage, but when it comes to actually issuing the contracts, hiring managers are delaying this end decision.
Other interesting trends that continue within the Singapore market are continued offshoring of certain departments and business units by organizations, the commitment to local hiring the Fair Consideration Framework. These trends and others will naturally make for an interesting 2016.