Unemployment and growing job insecurity in China have seen a sharp increase, becoming a major contributor to the ongoing slowdown in the Chinese economy. The real estate crisis is another factor that is being cited for the dip in China’s GDP, which is however a fallout of declining confidence among property buyers amid the disturbing unemployment situation in the country.
In the previous financial quarter, the growth rate of the Chinese economy shrunk to 4.1 percent, missing the expectations of 5.1 percent. While the fresh graduates are struggling to find jobs, those already employed are scared of being sacked anytime or forced to work at lower salaries. Joblessness in China is still high, with the youth unemployment rate remaining at 13.2 percent in June.
The Chinese job market is filled with growing insecurities and uncertainties. Many companies in China have laid off employees without any advanced notice or furnishing any reasons for it. Companies laid off employees and slashed salaries, according to a review of the annual reports of 23 Chinese companies, involving giants from real estate, financial services, automotive and internet sectors.
The major blow came from technology companies such as Ericsson, Tesla, Amazon, Intel, Tencent Holdings, Xiaomi, Kuaishou Technology, Didi Chuxing, Bilibili and Weibo. Highlighting a distressing situation, a few employees at some of these firms said they were waiting to get sacked.The uncertainty and insecurity have forced Chinese employees to work at lower remuneration. “I’m downgrading spending pretty much across the board—on food, clothes, accommodation and transportation,” said Li Zhe, a university lecturer from Haikou.
Chinese tech giant Baidu has sacked several employees in the past few years. What was shocking to Chinese people was Baidu’s lack of concern for employees’ well-being and lives. “I’m not your mother-in-law. I’m not your mom. I only care about your results,” Baidu’s vice president Qu Jing told one employee. In one viral video, she was seen slamming one employee for not working on weekends.
The Baidu viral videos set off a flood of angry comments by Chinese professionals. One Weibo user said the capitalists in China did not even bother to pretend. “They just handed down their bloody rules to the public like a rapacious aggressor,” the user wrote. Others and Qu herself complained about the aggressive and inhuman work conditions in the Chinese job market. “Her words were nasty. But what she said reflects reality,” said another Weibo user.
China’s internet firms used to be mass employers a few years ago. However, the situation has changed now due to declining returns, forcing these companies on profitability. It is more or less the same for the entire job market. “With low profit margins amid a sluggish economy, private companies are understandably adopting workforce reductions. State-owned enterprises, on the other hand, may resort to payroll adjustments to save money,” said Ding Shuang, chief economist for Greater China with Standard Chartered.
Millennials are worried about salary cuts and job losses. About 85 percent of mid-career professionals are struggling to get jobs, revealed human resources company Zhaopin. Companies seek to improve profits by giving lower salaries and ruling out allowances like child allowance. Rather they prefer hiring recent graduates to save money.
Chinese mid-career professionals are afraid of ‘the curse of 35’ as Chinese companies are fast-losing interest in them. “My last salary had dropped to 60 per cent of what I earned at the age of 35 in 2018 – at the peak of the internet industry boom,” said Jim Jiao, who had to switch to an overseas job to get an adequate salary.
These mid-career professionals face higher odds of rejection in Chinese companies due to age-related biases. “Those who have been laid off have had their life plans thrown into turmoil. Even those who have avoided termination are forced to work more overtime and are fearful of the next round of layoffs,” said Shanghai-based game developer Ding.
The battered job market has reduced consumption expenditure and translated into pervasive pessimism. China’s weak productivity growth can worsen further if underemployment spreads, said economics exert David Wang. “If this is persistent, it will become very problematic for China’s economy,” he said.
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