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Category Archives: Employment

Chart: U.S. Initial and Continuous Jobless Claims Kept Rising in October 2022

Source : Bloomberg

Chart: U.S. Inflation vs. Wages – Inflation Is Winning

Source : Chartr

Younger Chinese Are Spurning Factory Jobs That Power the Economy

David Kirton wrote . . . . . . . . .

Growing up in a Chinese village, Julian Zhu only saw his father a few times a year when he returned for holidays from his exhausting job in a textile mill in southern Guangdong province.

For his father’s generation, factory work was a lifeline out of rural poverty. For Zhu, and millions of other younger Chinese, the low pay, long hours of drudgery and the risk of injuries are no longer sacrifices worth making.

“After a while that work makes your mind numb,” said the 32-year-old, who quit the production lines some years ago and now makes a living selling milk formula and doing scooter deliveries for a supermarket in Shenzhen, China’s southern tech hub. “I couldn’t stand the repetition.”

The rejection of grinding factory work by Zhu and other Chinese in their 20s and 30s is contributing to a deepening labour shortage that is frustrating manufacturers in China, which produces a third of the goods consumed globally.

Factory bosses say they would produce more, and faster, with younger blood replacing their ageing workforce. But offering the higher wages and better working conditions that younger Chinese want would risk eroding their competitive advantage.

And smaller manufacturers say large investments in automation technology are either unaffordable or imprudent when rising inflation and borrowing costs are curbing demand in China’s key export markets.

More than 80% of Chinese manufacturers faced labour shortages ranging from hundreds to thousands of workers this year, equivalent to 10% to 30% of their workforce, a survey by CIIC Consulting showed. China’s Ministry of Education forecasts a shortage of nearly 30 million manufacturing workers by 2025, larger than Australia’s population.

On paper, labour is in no short supply: roughly 18% of Chinese aged 16-24 are unemployed. This year alone, a cohort of 10.8 million graduates entered a job market that, besides manufacturing, is very subdued. China’s economy, pummelled by COVID-19 restrictions, a property market downturn and regulatory crackdowns on tech and other private industries, faces its slowest growth in decades.

Klaus Zenkel, who chairs the European Chamber of Commerce in South China, moved to the region about two decades ago, when university graduates were less than one-tenth this year’s numbers and the economy as a whole was about 15 times smaller in current U.S. dollar terms. He runs a factory in Shenzhen with around 50 workers who make magnetically shielded rooms used by hospitals for MRI screenings and other procedures.

Zenkel said China’s breakneck economic growth in recent years had lifted the aspirations of younger generations, who now see his line of work as increasingly unattractive.

“If you are young it’s much easier to do this job, climbing up the ladder, doing some machinery work, handle tools, and so on, but most of our installers are aged 50 to 60,” he said. “Sooner or later we need to get more young people, but it’s very difficult. Applicants will have a quick look and say ‘no, thank you, that’s not for me’.”

The National Development and Reform Commission, China’s macroeconomic management agency, and the education and human resources ministries did not reply to requests for comment.

MODERN TIMES

Manufacturers say they have three main options to tackle the labour-market mismatch: sacrifice profit margins to increase wages; invest more in automation; or hop on the decoupling wave set off by the heightened rivalry between China and the West and move to cheaper pastures such as Vietnam or India.

But all those choices are difficult to implement.

Liu, who runs a factory in the electric battery supply chain, has invested in more-advanced production equipment with better digital measurements. He said his older workers struggle to keep up with the faster gear, or read the data on the screens.

Liu, who like other factory chiefs declined to give his full name so he could speak freely about China’s economic slowdown, said he tried luring younger workers with 5% higher wages but was given a cold shoulder.

“It’s like with Charlie Chaplin,” said Liu, describing his workers’ performance, alluding to a scene in the 1936 movie “Modern Times”, about the anxieties of U.S. industrial workers during the Great Depression. The main character, Little Tramp, played by Chaplin, fails to keep up with tightening bolts on a conveyer belt.

Chinese policymakers have emphasised automation and industrial upgrading as a solution to an ageing workforce.

The country of 1.4 billion people, on the brink of a demographic downturn, accounted for half of the robot installations in 2021, up 44% year-on-year, the International Federation of Robotics said.

But automation has its limits.

Dotty, a general manager at a stainless-steel treatment factory in the city of Foshan, has automated product packaging and work surface cleaning, but says a similar fix for other functions would be too costly. Yet young workers are vital to keep production moving.

“Our products are really heavy and we need people to transfer them from one processing procedure to the next. It’s labour intensive in hot temperatures and we have difficulty hiring for these procedures,” she said.

Brett, a manager at a factory making video game controllers and keyboards in Dongguan, said orders have halved in recent months, and that many of his peers were moving to Vietnam and Thailand.

He is “just thinking about how to survive this moment,” he said, adding he expected to lay off 15% of his 200 workers even as he still wanted younger muscles on his assembly lines.

CONFLICTING ASPIRATIONS

The competitiveness of China’s export-oriented manufacturing sector has been built over several decades on state-subsidised investment in production capacity and low labour costs.

The preservation of that status quo is now clashing with the aspirations of a generation of better-educated Chinese for a more comfortable life than the sleep-work-sleep daily grind for tomorrow’s meal their parents endured.

Rather than settling for jobs below their education level, a record 4.6 million Chinese applied for postgraduate studies this year. There are 6,000 applications for each civil service job, state media reported this month.

Many young Chinese are also increasingly adopting a minimal lifestyle known as “lying flat”, doing just enough to get by and rejecting the rat race of China Inc.

Economists say market forces may compel both young Chinese and manufacturers to curb their aspirations.

“The unemployment situation for young people may have to be much worse before the mismatch could be corrected,” said Zhiwu Chen, professor of finance at the University of Hong Kong.

By 2025, he said, there may not be much of a worker shortfall “as the demand will for sure go down.”

‘YOU FEEL FREE’

Zhu’s first job was to screw fake diamonds into wristwatches. After that he worked in another factory, moulding tin boxes for mooncakes, a traditional Chinese bakery product.

His colleagues shared gruesome stories about workplace injuries involving sharp metal sheets.

Realising he could avoid reliving his father’s life, he quit.

Now doing sales and deliveries, he earns at least 10,000 yuan ($1,421.04) a month, depending on how many hours he puts in. That’s almost double what he would earn in a factory, though some of the difference goes on accommodation, as many factories have their own dorms.

“It’s hard work. It’s dangerous on the busy roads, in the wind and rain, but for younger people, it’s much better than factories,” Zhu said. “You feel free.”

Xiaojing, 27, now earns 5,000 to 6,000 yuan a month as a masseuse in an upscale area of Shenzhen after a three-year stint at a printer factory where she made 4,000 yuan a month.

“All my friends who are my age left the factory,” she said, adding that it would be a tall order to get her to return.

“If they paid 8,000 before overtime, sure.”


Source : Reuters

For Young Chinese, Even State Sector Jobs Are No Longer a Safe Bet

Zhang Liting and Dominic Morgan wrote . . . . . . . . .

When he landed a job in China’s civil service in 2020, Wang Chang’an felt like he’d hit the jackpot.

The 30-something already had a good job at an auto company in Shanghai, and he knew a career in public service wouldn’t offer the same glamor or earning potential. But he believed it would have other advantages: respectability, a more relaxed schedule, and ironclad job security.

Millions of young Chinese have made the same calculation during the pandemic, as strict “zero-COVID” measures cause unprecedented economic disruption. Graduates have applied for the civil service exam in record numbers, hoping to secure access to the state’s “iron rice bowl.”

Wang faced nearly 100 other applicants for the position, a junior role at a small township in the eastern city of Suzhou. He was bursting with pride when he heard he’d won out.

Yet, just two years later, Wang is already disillusioned with life in the state sector — and looking for a way out.

“I’ve actually found another job,” says Wang, who spoke with Sixth Tone using a pseudonym for privacy reasons. “But I’m still hesitating — my family doesn’t support me jumping out of the civil service.”

The problem is that the public sector hasn’t lived up to its reputation of being a safe haven. Nearly three years into the pandemic, many of China’s local governments are facing eye-watering fiscal deficits and implementing austerity measures. And those cuts are hitting civil servants hard.

Wang had originally expected to earn at least 250,000 yuan ($34,600) per year at his new job. In reality, he estimates he’s being paid just 160,000 yuan. His basic salary has been cut by 30%; his social insurance payments haven’t risen as promised; part of his annual bonus has never been paid.

Instead, Wang finds himself forced to work regular unpaid overtime shifts, helping to implement the town’s virus-control policies, and trying to cut back spending at home. His plans to trade in his boring SUV have been put on hold indefinitely.

“Changing the car? It’s impossible,” he sighs. “The loan for this car hasn’t been paid off yet.”

Many other Chinese civil servants are facing steep pay cuts, as local authorities struggle to plug yawning holes in their budgets.

China’s local governments have faced a perfect storm of fiscal challenges in 2022. The economy has slowed after months of on-again-off-again lockdowns. Business tax cuts introduced by the central authorities have squeezed income further. And a sharp drop in land sales caused by China’s real estate crisis has choked off another important revenue stream.

Local deficits in many areas have ballooned to worrying levels. During the first eight months of the year, local governments’ financial self-sufficiency fell to 51.7%, the lowest level in more than a decade, domestic media reported.

“This situation is already very critical,” Wu Muluan, an associate professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy, tells Sixth Tone. “Local finances are like a dry river.”

China’s central government has agreed to transfer extra funding to local authorities, but this hasn’t been enough to make up the shortfall. That has forced local officials all over the country to take drastic measures to balance the books.

One county in north China’s Shanxi province announced a sweeping consolidation of government bodies, with hundreds of organizations being axed. Other governments have stepped up sales of public assets, or loaded debt onto hidden investment vehicles through “sham” land sales.

But in many cases, authorities are also cutting expenditure by chipping away at civil servants’ paychecks. New hires like Wang sometimes find themselves earning a fraction of what they had originally expected to receive.

Yin Yu also says she regrets her decision to take a state sector job. The 25-year-old moved back to her hometown in southwest China’s Sichuan province after graduation last year, and now works at a local middle school.

On her first day, the principal thanked Yin and the other new hires for being willing to join the school, and promised not to take their passion for granted, Yin recalls. But within months, the teachers found they were only being paid around half of what they believed they were owed. In August, the principal abruptly left the school.

Yin says she and her colleagues are now on track to earn just 80,000 yuan this year. Their basic salary has never risen above 3,200 yuan per month, whereas teachers at other nearby schools are making nearly double that amount. Their monthly social insurance payments, meanwhile, have fallen from 3,000 to 1,200 yuan, and their annual bonus and expenses allowance have also been reduced. “I really want to quit,” Yin says.

The pay cut has had a huge impact on Yin and her family. She had been planning to start a family with her husband, but now she’s uncertain whether they can afford to. She had also been hoping to help her mother buy a house in Sichuan, so that she no longer had to live and work in faraway Guangdong province. That dream has now also died.

“I feel really sorry for my mom,” says Yin. “It’s funny to say that I’m a teacher — isn’t it a great job? But how come I can’t afford to support my mother?”

Not every civil servant is being affected equally. There is no blanket nationwide policy regarding salary cuts, as the decisions are being taken by local governments according to their specific needs, says Wu, the professor. Smaller, lower-level governments tend to be under the greatest financial pressure.

“But it (pay cuts) seems to happening all over the country,” Wu says.

Zhang Lin, an employee at a municipal people’s court in east China’s Zhejiang province, considers herself relatively fortunate. Though she has seen her income fall, she knows others elsewhere are struggling more.

“It’s true that the pay has been reduced, but Zhejiang is richer than other places,” she says.

The 31-year-old estimates that she will make around 200,000 yuan this year — a significant, but not drastic fall, she says. The cuts have mainly been to her social insurance and bonus payments, which typically make up a large part of Chinese civil servants’ pay packages.

Having bought a house just last year, the cuts have forced Zhang to become more frugal with her money. But she isn’t too worried about making her mortgage payments, she says. The only problem is that her paychecks have begun to fluctuate wildly each month, though she has no idea why.

“Sometimes, it’s 7,000 yuan. At its lowest point, it was just 1,000 yuan, but then it suddenly rose to 20,000 yuan,” says Zhang.

Other state workers, however, are facing real hardship. One local official, who works at a township government in a remote part of Guangdong province, says he didn’t believe the rumors about salary cuts when they first began to spread as his pay was already so low.

“I didn’t take it seriously, because I was working in a financially impoverished area in western Guangdong and receiving a living wage,” the official, who requested anonymity for privacy reasons, tells Sixth Tone. “At that time, I thought there would be nothing to deduct.”

He was mistaken. Over the past 15 months, his pay has dropped from 5,200 yuan to 3,000 yuan per month, after several subsidies were withdrawn. Several of his colleagues are now struggling to meet their mortgage and car loan payments, he says.

“The grassroots staff and the families who are not very well-off really suffered a blow,” the official says. “Fortunately, I am smart enough not to buy a house or a car. After all, my salary is only a few thousand a month.”

It remains unclear when local governments will be able to reverse these cuts. At the moment, the signs are not promising. In June, one governor in northeast China reportedly told officials they needed to wield an “iron abacus” — a reference to keeping spending tight.

China’s economic recovery since June promises to provide local governments with some relief. Yet local finances will only truly recover if the central government steps in and provides extra funding, Wu says.

“We don’t know how the central government will rescue these local governments,” says Wu. “But I believe this is something we should be very careful about in the near future … The current problem should not be underestimated.”

Some public sector workers’ patience has already run out. Xiaochen took a job at a school in Xiamen, a seaside city in east China’s Fujian province, after graduating in 2020. But she quit the job in July, as her salary had been reduced to less than half its original level.

“I couldn’t bear it anymore,” says Xiaochen, who also spoke with Sixth Tone using a pseudonym due to privacy concerns.

A graduate of a top Chinese university, Xiaochen originally took the job partly because it offered a decent salary package of 260,000 yuan. But after months of denials about an impending salary cut, the school reduced her pay to just 120,000 yuan earlier this year.

For Xiaochen, the lower figure was unacceptable, as it’d be almost impossible to buy a home in pricey Xiamen on that salary. She also knew that her former classmates working in the tech sector were making nearly three times that amount.

So, Xiaochen has also taken a job in the private sector, and says she’s considering going back to school after she’s saved up some money.

Wu, however, doubts that too many civil servants will follow suit. Though many are dissatisfied with the wave of pay cuts, they are still much less likely to lose their jobs than private sector workers, he says.

“Having a job is different from how much money you can make from this job,” says Wu. “The job is the most important thing … If you don’t have a job, you’re the biggest victim.”

For Wu, the civil service increasingly resembles a “besieged city”: those inside the system want to flee outside, and those outside it want to break into it.

“This is an absolute siege, because it’s actually difficult inside the system, and also difficult outside,” says Wu. “And it’s ugly. It’s complicated.”


Source : Sixth Tone

Hiring at China’s Small Firms Fails to Pick Up from Record Low

Hiring activities by China’s smaller companies were near a record low last month, underscoring how the slump due to a property downturn and Covid Zero controls is hitting firms which are the backbone of the economy.

The ‘Blue Collar’ Job Index for small and medium-sized businesses, which are mostly in manufacturing and services, showed little improvement in the third quarter after hitting an all-time low of 0.3 in June, according to the Beijing-based China Institute for Employment Research. That means there’s more than three times as many applicants as there are jobs available.

The index “reflects declining hiring demand in manufacturing and services due to the economic downturn” said Zeng Xiangquan, head of the institute which compiled the data. The recent plunge is a sharp reversal from the situation in late 2020 and early 2021, when the index climbed as factories struggled to hire enough workers to meet surging overseas orders for Chinese goods during the pandemic.

The index is compiled based on data from job listing website 58.com Inc. that begins in 2016.

Nationwide data showed the employment situation worsened in September, with the surveyed jobless rate rising to 5.5%, while the youth unemployment rate was almost 18%, according to data released earlier this week.

Covid and Housing

On top of dwindling demand from factories, Covid restrictions also damaged businesses in tourism, catering and hospitality, according to Zeng. Small companies are likely to be less resilient than larger ones when it comes to withstanding shocks, he said.

With the housing slump now lasting more than a year, jobs related to the property and construction industries showed the biggest declines in the third quarter compared to last year. Job postings for construction supervisors tumbled 94% from a year ago, while postings for general construction workers, heating and air-conditioning mechanics and forklift operators all plunged more than 80%, according to the index.

That’s a change from the second quarter, when major cities like Shanghai and Shenzhen went into lockdowns and positions such as subway and bus workers, shop assistants and coffee baristas saw the biggest falls.


Source : BNN Bloomberg

Chart: IMD World Talent Ranking 2021

Eastern Asia, Southern Asia and Pacific


See large image . . . . . .

Source : Business World


Read the full report . . . . .

Chart: U.S. Inflation is Outpacing Wage Growth

September was the eighteenth month in a row during which price inflation has outpaced earnings.

Source : Bloomberg

Chart: U.S. Manufacturing Employment Near 14-year High

Source : Chartr

Charts: U.S. Job Openings Plunged in August 2022

The absolute number of openings remained high.

Number of quits rose again in August.

Source : Bloomberg

China Youth Jobless Rate Drops Slightly From Record in August 2022

China’s youth unemployment eased in August from a record in the previous month, a surprise slowdown at a time when new graduates usually flood the labor market.

The surveyed jobless rate for those aged 16-24 slid to 18.7% last month from 19.9% in July, the National Bureau of Statistics said Friday, the first decrease in 10 months. The national urban unemployment rate also eased, to 5.3% from 5.4%.

The improvement in the jobless rate came alongside better-than-expected figures for industrial production and retail sales as the economy shows some signs of recovery.

Youth unemployment usually peaks during graduation season around July and August each year, with a record 10.76 million students estimated to enter the job market this summer.

Despite the improvement last month, the unemployment rate remains close to 20% for young people and will continue to be a concern to policy makers, especially ahead of the Communist Party’s twice-a-decade leadership congress next month.

The government has recently stepped up policy incentives to address the problem, including expanding subsidies to businesses that hire fresh university graduates. However, economists say structural changes in the economy mean the youth jobless rate will remain elevated.

“No amount of manufacturing and infrastructure stimulus would be effective in relieving” the problem, Morgan Stanley analysts including Robin Xing wrote in a report last week. “Younger cohorts prefer opportunities in services” and recent graduates “suffer from skill mismatch due to unrealized expectation of high growth in the tech and education sectors,” they said.


Source : BNN Bloomberg