The recent worrying, steep deterioration in air quality in Shanghai – the city the Chinese government wants to become the dominant financial hub in Asia – is starting to pose a risk for recruiters looking for talent, with Chinese nationals starting to factor it into their job decisions.
And now Shanghai is battling severe pollution, just as the government rolls out a raft of incentives and initiatives to transform the megacity into Asia’s financial powerhouse.
Earlier this month, the pollution index in Shanghai nearly went off the scale, reaching a record 482 on December 6, prompting warnings that it will undermine plans to promote the new free trade zone and other initiatives to centre Asia’s financial services industry in the capital. To put it in perspective, anything over 200 is regarded as dangerous, and triggers warnings for people to stay indoors.
According to the state news agency Xinhua, 430 of the world’s Top 500 companies now have a presence in Shanghai, which is home to 160,000 foreign workers.
Xinhua says the city was ranked China’s most attractive by expats in 2013, so December’s choking smog, which forced families indoors for days and resulted in a state order for cars to stay off the roads, surprised many Shanghai residents who believed that the city was coping better with smog than Beijing.
The worsening pollution problem China was driving expats home, stopping others from considering a move there, and even putting the kaibosh on plans by Chinese nationals living abroad to return home country to live and work.
Doha-based broadcaster Al Jazeera called it China’s ‘airpocalypse’, and said it was causing ‘some expat executives to reconsider accepting jobs in China, forcing some firms to offer bonuses of up to 30% to attract foreign talent. A growing number of expats are citing air pollution as a primary cause for leaving the country.’
Simon Lance, regional director of Hays in China, acknowledges that air pollution is a very hot topic at the moment, but to date has seen little real hard evidence that candidates are demanding better packages or turning jobs down because of poor air quality.
Lance says that concerns about food safety and air quality are often voiced outside of China. “Despite this, air quality has not come up as an issue for expats moving to China, according to Hays GlobaLink , which sources western candidates for China. Many foreign executives are still keen to move to the mainland to tap opportunities unavailable in the US or Europe. The salary levels and an opportunity to work in a first-tier city usually outweigh concerns over air quality or lifestyle.”
He says, however, that some Chinese candidates have cited air quality as a reason for leaving the country and moving to places like the UK or Australia.
Linda Ye Zhang, partner in Heidrick & Struggles’ Shanghai office, says that she has experienced candidates declining opportunities due to the air pollution, but hasn’t yet seen any impact in Shanghai yet, which has only recently started to experience the same levels of poor air quality.
“There are people moving out (of China) for various reasons, including air quality, education and food safety.” She believes, however, that China remains an attractive destination for people looking to build their careers, while acknowledging that for those with families, it may be less appealing, especially as living costs have escalated and income tax is high relative to Hong Kong and Singapore.
Rob Chipman, CEO at Asia Tigers Mobility in Hong Kong says it is hard to quantify how much of an impact air quality is having on internationally mobile workers, adding that decisions to leave or turn down opportunities are usually attributed to a number of reasons, such as lack of schooling for children.
But he points out that the air quality issue is a serious one. This, combined with the growing pressure on international schools in Shanghai, for instance, and the rising rentals which are approaching Hong Kong levels without the mitigation of lower personal income tax rates, is deterring people from moving to Shanghai in the first place, or resulting in people leaving sooner than they might have.
Chipman, who was chairman of the American Chamber of Commerce in Hong Kong in 2011, says that business is trying to instill a sense of urgency in government to do something about it, “but it is difficult to isolate the impact of pollution”.
But Christine Raynaud, CEO of MRIC Group recruitment firm, believes that China’s pollution woes are having a measurable impact.
Citing the group’s annual Talent Report, which compiles data from over 6000 respondents across Greater China, she says that preliminary data for the 2014 report shows that Beijing has fallen significantly as a destination choice for professional talent over the past year.
“We believe rising air pollution is a key contributing factor in this drop,” says Raynaud. Another related trend from the survey is the increasing value that professional staff in China place on employers supplying a “healthy work environment,” including outfitting offices with air purifying filters.
“While air quality has been a rising concern among expats in China for several years, what is new this year is that Chinese professionals are now also making career choices with air quality in mind.”
Alistair Ramsbottom, MD of Shanghai-based Blacklock Group, says the pollution issue could seriously damage the ability of financial institutions in China to attract quality talent. “With a higher tax rate than places such as Singapore and Hong Kong, and then adding on top the air quality and environment it may become more challenging.”
The Lancet medical journal estimates that air pollution contributed to about 1.2 million deaths in China in 2010. This represents four in ten deaths worldwide.