Print Сite this

The Rising Cost of Retaining Employees

Hiring and retaining a good employee is one thing that for many years has left many companies in a dilemma. Usually, an employee works hard to ensure that they retain that dream job. However, this trend is fast-changing, and today it’s companies that are on the receiving end when it comes to hiring and keeping a good employee. This has been occasioned by the shortage of qualified labor in the market. The high demand for jobs and the low supply of labor have forced many companies to increase the wages of their employees to keep them from taking up other lucrative jobs. The high salaries paid to these employees have taken a big toll on the profits of different companies. Though the problem is not that bad in some countries, in others it has become acute. An example of such a country is China.

We will write a
custom essay
specifically for you

for only $16.05 $11/page
308 certified writers online
Learn More

Many companies in China have reported that they have had to increase salaries up to 50 percent in a bid to retain their employees. For a very long time, China has been a hub of very cheap labor. This situation has however changed over the last few years. In the Guangdong Province, for example, it is estimated that there are over two and a half million jobs that have to be filled. This vacuum has been because of the rising number of jobs and a low supply of employees to fill those posts. Many companies have therefore opted to pay the available employees well to prevent them from joining other rival companies. Companies are opting to compete based on labor cost instead of on any other front. This has brought out a trend where companies that pay high salaries have the best employees. This is also true for countries since most people are going where they think the money is. This has left a big employment vacuum on some companies and the respective countries as well.

Long since gone are the days when companies used motivational approaches to retain employees. Companies are learning the hard way that the few qualified labor force cannot simply be motivated by including them in decision making at their workplaces. What people are looking for today is how high the money is. This has left companies who are in need of skilled labor with no option but to part with more money to retain their employees. This is in a bid to make sure that businesses do not close shop for lack of qualified staff.

Many companies have also been forced to rethink their human resource strategies in order to attract skilled labor. Where skilled people often went to companies to look for jobs, many companies are now going to look for graduates straight from the university. Since these graduates are usually not skilled in doing some jobs, the companies often result to taking them for further studies at the company’s cost. This idea of recruiting people straight from school has ensured that employers come closer to getting their required number of employees. Companies have also resulted to cutting down on expenditure in order to maximize their profits that in turn go to finance salaries. One area where companies are cutting down is on expenditure is in payment of utility bills like electricity. In short, companies are spending less on their operations in order to increase salaries.

Many companies have also been forced to move their operations from the major cities where the cost of operation is high. In most cases, operating in the inland areas cuts the cost of labor cost by almost 50 percent. This strategy seems to be working for many companies. Companies have also been forced to manufacture high-margin goods that in turn rake more profits. This has ensured that companies have enough money to pay the increased labor cost. Companies have also resulted to increasing the prices of their goods in a bid to raise more money. This is all in a bid to ensure that these companies get more money to pay their staff well and in turn stay in the competition.

As the competition for workers in China heats up, employers will soon find themselves faced with a situation where they will have to completely change the way they deal with employees. One area where they will be required to completely change is in the number of hours that employees work in a day. No one will expect employees to work for 12 hours without having a break. In the future, we will see a break from the past when the only time a company’s staff used to bond was at the end-of-year party. Many companies have now resulted to offering regular parties, which are used as a forum for bonding with the employees. Other companies have resulted to build daycare centers for employees with small children to ensure that they give their maximum concentration on their job. On the other part, the government has realized the magnitude of the problem and is offering tax breaks to Chinese who opt to return from overseas to take up positions in their own country. Higher education has also been overhauled to incorporate classes that are more practical and ones that offer vocational training.

Cite this paper

Select style


StudyCorgi. (2021, November 25). The Rising Cost of Retaining Employees. Retrieved from


StudyCorgi. (2021, November 25). The Rising Cost of Retaining Employees.

Work Cited

"The Rising Cost of Retaining Employees." StudyCorgi, 25 Nov. 2021,

1. StudyCorgi. "The Rising Cost of Retaining Employees." November 25, 2021.


StudyCorgi. "The Rising Cost of Retaining Employees." November 25, 2021.


StudyCorgi. 2021. "The Rising Cost of Retaining Employees." November 25, 2021.


StudyCorgi. (2021) 'The Rising Cost of Retaining Employees'. 25 November.

This paper was written and submitted to our database by a student to assist your with your own studies. You are free to use it to write your own assignment, however you must reference it properly.

If you are the original creator of this paper and no longer wish to have it published on StudyCorgi, request the removal.