The Influence of the Labour Market and COVID-19 on Human Resource Practices in SMEs in China: A Longitudinal Study

Purpose: The purpose of this study is to investigate the evolving perceptions and human resource (HR) responses of owners and HR managers of Chinese small and medium-sized enterprises (SMEs) towards local labour markets in the context of the impact of the coronavirus disease 2019 (COVID-19) pandemic. Design/methodology/approach: This study adopts a two-stage longitudinal qualitative approach involving 52 interviews with owners and HR managers of Chinese SMEs in the pre- and post-pandemic time periods. Findings: The findings reveal a shift from the perceptions of a general labour shortage to perceptions of specialised talent shortages and increasing geographical disparities in local labour markets. They further reveal that SMEs are increasingly likely to adopt efficiency-oriented, flexibility-enhancing HR practices in the face of high uncertainty. Practical implications: The findings provide insights into the nature of the constraints of SMEs' sustainable development that need to be addressed by policymakers, SME owners and HR managers when they devise and implement policies relating to structure optimisation, labour market integration and mobility enhancement. Originality/value: In contrast to extant literature that has examined the labour market at the national level, this study explores the views of SMEs (the demand side) by taking a localised perspective on how SMEs have responded to change through their HR practices.