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Recently, the U.S. Federal Trade Commission (FTC) announced a major decision that will completely prohibit all employers from entering into new "non-compete agreements" and other similar clauses with employees. The news has attracted a lot of attention in the industry, with Wall Street financial firms restructuring contracts and looking for new strategies to limit the flow of key talent.
The FTC's decision means that existing non-compete agreements for senior executives, people in "policy-making positions" who earn more than $151164 per year, will remain in effect, and existing non-compete agreements for other employees will no longer be enforced after the stated effective date.
Some believe that this will break a series of "unspoken rules" on Wall Street, such as enforcing mandatory paid "gardening leave", withholding employees when they change jobs, deferred bonuses, etc. Headhunters predict that this will provide opportunities for talented traders, investors and bankers who are not satisfied with their current roles to change jobs, and make teams that can offer higher pay and a better working environment more competitive.
In response to this news, some netizens said, "I want to know when and when China will follow up? If 100% of the salary is paid during the non-compete period, there are still some who say, but in fact, it generally does not exceed 50% and is not even intended to be given, this is simply an overlord treaty." ”
Non-compete agreements are also a common agreement in the human resources service industry in mainland China. Such agreements often restrict employees from performing similar work in the same industry for a certain period of time after leaving the company, or prohibit business dealings with the company's customers and partners. Such an agreement protects the company's business interests to a certain extent and prevents employees from using the company's trade secrets and customer resources to engage in competitive work. However, it also restricts employees' freedom to develop their careers.
Look back at the human resource service industry in mainland China
Service capacity improvement
In 2020, a total of 45,800 human resource service agencies across the country provided human resources services to 49.83 million employers, helping 290 million workers to achieve employment, job selection and mobility. Since 2016, the service capacity of human resource service agencies in mainland China has been significantly improved, and the growth rate of the number of service employers has remained at about 15%, and in 2020, it reached 18%. In 2021, the number of employers served by human resource service agencies in mainland China will reach 57 million.
The number of employers served exceeded 50 million
From 2012 to 2021, the number of services provided by Chinese human resources service agencies to employers continued to rise. Since 2016, the service capacity of human resource service agencies in mainland China has been significantly improved, and the growth rate of the number of service employers has remained at about 15%, and in 2020, it reached 18%. By 2021, the number of service employers reached 50.99 million, an increase of 2% from 2020.
Industry development prospects
From the perspective of historical growth rate, the growth rate of Chinese's human resource service market from 2014 to 2021 has remained at about 17%, which is in a high-speed growth stage. In the context of policies and the continuous growth of the number of national graduates, the demand for human resource services continues to be strong. Therefore, it is expected that the scale of Chinese's human resources service market will maintain a high growth rate in the future. It is predicted that by 2027, the market size of the human resource service industry in mainland China will reach about 4.5 trillion yuan.
As talent mobility accelerates and employees pursue career freedom, companies may need to rethink how they protect their business interests while giving employees more room to grow in their careers. In this context, the HR service industry may need to find more practical ways to balance the interests of enterprises and the rights and interests of employees.
Prospective Economist APP Information Group
For more research and analysis of this industry, please refer to the "Chinese Human Resources Service Industry Market Prospect and Investment Strategic Planning Analysis Report" of the Prospective Industry Research Institute
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