Special Topic: Finding and Keeping Jobs in China

A few weeks ago, in an article entitled Light at the End of the Unemployment Tunnel, I speculated that we may be seeing the first shoots of recovery sprouting in the Chinese job-market. This speculation came from two or three clear, albeit small, signs of financial improvement. These included 3.65 million previously unemployed urban residents finding jobs in 2009, and the Purchasing Manager’s Index – an index used to calculate the level of manufacturing in the country – showing positive trends for the third month in a row. However, as encouraging as these signs were, I tried to temper them with a healthy serving of realism as the numbers involved were small (almost miniscule even) in comparison to some of the numbers we saw prior to the onset of the global financial crisis.

Employment office, Guangzhou, Photo: gruntzooki

The recent publication of the quarterly Hudson Report confirmed that whilst there certainly is room for optimism, the reality of the Chinese job market is still very harsh. The survey of 843 executives at major companies across a variety of key sectors revealed that, even though China has the brightest outlook of any major Asian nation, the arrows on most employment indicators are still pointing down. Mark Carriban, Hudson’s Asia Managing Director said, “Expectations are higher than in the other markets surveyed in Asia but are at their lowest since 2001. The proportion of employers planning to reduce their headcount this quarter has more than doubled.”

The good news from the survey is that 30% of the companies surveyed plan to hire staff in the second half of 2009. The bad news is that this figure is down from Q1’s 34%. This reduction represents the third straight quarter in which hiring expectations have fallen, and is part of an overall downward trend that began at the end of 2007 when things peaked with 64% of companies planning to hire new employees. Unfortunately, in conjunction with the reduction in hiring, the amount of companies planning to reduce their headcount is on the rise, from 8% in Q1 to 21% in Q2. However, as bleak as these statistics look, Chinese workers can take solace from the fact that the country remains in ‘employment credit’, albeit with a much reduced balance. Employees in Japan on the other hand, are staring down the barrel of an employment deficit: 22% of companies are planning to hire with 24% planning to reduce their headcount.

One important caveat to the above statistics is that the numbers for China represent only the mainland. In Hong Kong, the situation is much worse, with the SAR facing a shortfall even greater than that of Japan. Only 12% of the companies taking part in the survey plan to hire in the coming months. This represents the lowest figure since Hudson first began the survey in 1998. 24% plan to cut headcounts. These sobering statistics reflect the global decline in the banking and finance sector.

With companies cutting headcounts and freezing recruitment drives, the situation is not great for job seekers – opportunities are still very limited. However, the gloom does not just extend to recruitment. Hudson also revealed that 55% of companies are planning to cut HR costs across their organizations and across all HR functions. Reducing headcount is the most popular (although I am not sure if that is the right word as no one likes large-scale lay-offs) approach to this cost-cutting, with 39% having done so already in 2009 and 21% considering it in the coming months. However, there are a variety of other measures that have been used by major companies to save their pennies. The most common of these has been a reduction in bonus payments. A prevalent example of this was the reduction in bonuses paid at Spring Festival, or bonuses paid in the form of goods, training or vacation time as opposed to cold hard cash. A survey by recruitment firm 51Job earlier this year also found that only 9% of companies planned to keep their existing bonus schemes in 2009 and that 23% of companies planned to significantly reduce bonuses they would pay out. Other companies have also opted to save cash with extended holidays where their staff receive either unpaid or receive reduced pay. This happened at several companies over Spring Festival and the May Day holiday when some companies extended the holidays, at the expense of salaries.

With such a depressing outlook, one of the biggest challenges facing major organizations is keeping employee morale high. Hudson highlights that major companies need to ensure they deal decisively with potentially plummeting morale. Unsurprisingly, the most popular choices are the most cost-effective. In 2007 and 2008, companies could simply throw money at the problem. Solutions to this problem were often as blunt as offering larger salaries or inflated bonuses. Slightly more imaginative managers and HR departments would splash the cash on expensive training programs and lavish teambuilding. These solutions are still in play, but they are now far less popular. Instead, it is two free solutions that are the top choices. 25% of companies are looking to reinforce the message and mission statement put forth by their CEO others, whilst 26% of companies are making the effort to keep their staff feeling positive by keeping their communication channels open.

Special Topic: Finding and Keeping Jobs in China

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