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China’s job market improves in second quarter despite record low growth rate

South China Morning Post

發布於 2019年07月17日16:07 • Sidney Leng sidney.leng@scmp.com
  • Ratio of available jobs to jobs seekers rose to 1.89 in the second quarter, up from five-year low of 1.68 in the first three months of 2019
  • Government has targeted creating 11 million new jobs this year despite the ongoing trade war with the United States, which saw China’s GDP drop to a record low
NBS spokesman Mao Shengyong warned earlier this week that, while employment was stable, it will come under significant pressures from the record-high 8.3 million university graduates this year, many of whom will begin to look for jobs this summer. Photo: Xinhua
NBS spokesman Mao Shengyong warned earlier this week that, while employment was stable, it will come under significant pressures from the record-high 8.3 million university graduates this year, many of whom will begin to look for jobs this summer. Photo: Xinhua

China's job market improved slightly in the second quarter of 2019, with more posted vacancies than jobseekers, despite the country's record-low growth rate.

After dropping to a five-year low of 1.68 in the first quarter, the number of jobs available for every applicant increased to 1.89 in the following three months due to faster growth of seasonal hiring.

But the ratio, provided by the China Institute for Employment Research (CIER) at Renmin University of China in Beijing which tracks data on recruitment website Zhaopin every quarter, showed little change from the same period last year.

The report is largely in line with the unemployment data reported by National Bureau of Statistics (NBS) earlier this week, which showed that the monthly survey-based unemployment rate remained unchanged at 5 per cent in April and May before rising slightly to 5.1 per cent in June.

According to the China Institute for Employment Research index, the 10 sectors with the lowest ratio of vacancies to applicants are mostly in traditional industries, such as manufacturing, energy, mining, and printing, where there is low demand for new hires. Photo: AFP
According to the China Institute for Employment Research index, the 10 sectors with the lowest ratio of vacancies to applicants are mostly in traditional industries, such as manufacturing, energy, mining, and printing, where there is low demand for new hires. Photo: AFP

The average unemployment rates in the 31 provincial level capitals remained at 5 per cent in the second quarter.

Among the main employment group of workers aged between 25 to 59, the jobless rate dropped from 4.9 per cent in January to 4.6 per cent at the end of June.

Economists said that while the trade war with the United States would put downward pressure on employment in the months ahead, the overall impact on China's labour market would be limited.

But NBS spokesman Mao Shengyong warned earlier this week that, while employment was stable, it will come under significant pressures from the record-high 8.3 million university graduates this year, many of whom will begin to look for jobs this summer.

There are still some structural pressures. Some traditional industries, while going through transformation and overcapacity cuts, may also add to employment pressureMao Shengyong

"There are still some structural pressures. Some traditional industries, while going through transformation and overcapacity cuts, may also add to employment pressure," Mao said.

Economists argued that current employment pressures have less to do with slowing growth and more to do with structural issues, which mainly refers to industrial jobs that are being cut under domestic economic reform programmes and due to pressure from the ongoing trade war. In contrast, employment in the service sector has performed better.

The number of new graduates in the job market is high, but coupled with slowing growth in the number of migrant workers and an increasing number of retirements creating new job vacancies, it will not be that difficult to reach the government's target of creating 11 million new jobs this year, according to Jiang Chao, chief economist from Haitong Securities.

The NBS said the number of new jobs created had already reached 67 per cent of the target in the first half of the year.

Based on Jiang's calculations, taking into account employment and gross domestic product data in recent years, China's economy only needs to grow 5.3 per cent this year to create 11 million new employment positions. In the first half of 2019, growth slowed to 6.3 per cent, although this is still within the target of 6.0 to 6.5 per cent set by the government.

"(Nevertheless,) the structure of employment is obviously out of balance, and the agricultural population still needs to be transferred (to industrial and tertiary or service sectors)," Jiang said. "The employment structure of China is shifting from the agricultural sector to other sectors. With manufacturing under pressure, employment in the service sector remains relatively stable."

According to the CIER index, the 10 sectors with the lowest ratio of vacancies to applicants are mostly in traditional industries, such as manufacturing, energy, mining, and printing, where there is low demand for new hires. The top 10 sectors are largely related to service, such as travel agencies and headhunters, insurance, and education. One exception is financial services, which has seen both job postings and applicants shrink so far this year as the government has continued to clamp down on shadow banking.

A similar trend can also be observed in the official purchasing managers' index (PMI) survey, which gauges expectations among employers on a series of questions from orders to employment. In June, the employment sub-index for the manufacturing PMI plunged to 46.9, the lowest since February 2009, indicating a reduction in hiring. Employment in the non-manufacturing PMI, which includes both the services and construction sectors, also contracted, though at a slower rate.

The fundamental reason (for the current pressure in the job market) is that trade shocks and industrial slowdowns have exacerbated the structural imbalances in employmentJiang Chao

"The fundamental reason (for the current pressure in the job market) is that trade shocks and industrial slowdowns have exacerbated the structural imbalances in employment … auto manufacturing and sectors related to the trade war are the main drags in the short term," Jiang from Haitong Securities added.

But the impact of the trade war on the overall employment is still limited so far. In the worst-case scenario, where the US imposes 25 per cent tariffs on all goods shipped from China, that would cost China 5.5 million jobs, which would only amount to 0.8 per cent of total employment, according to Jiang.

If this scenario does become reality, the biggest job losses would occur in the computer and telecommunications, textile and apparel, as well as chemicals sectors.

In a report from 2017, the Ministry of Commerce said every US$1 million worth of exports to the US generated on average 39.2 jobs in China, a rate of job creation that is only higher than from exports to South Korea, but well behind the jobs created by exports to other major trading partners including Japan, India and the European Union.

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.

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