China matches US and Europe on salary stagnation
China’s labour market remains tight and unemployment low. And yet – just like in the United States, Europe and elsewhere – wages growth is not reflecting that strength.
Official and private gauges show demand for hiring remained healthy in the second quarter, with even the weakest regions and sectors recovering. Yet white-collar pay edged down from the first quarter and pay increases for the nation’s 281 million migrant workers also narrowed.
While conditions like those may be good for companies’ payroll costs, they also give less spending power to consumers who play an increasingly crucial role in generating economic growth. Technology is subject to the most demand for talent and professional services pay the best – positive signs for industries that the government is relying on to rebalance the economy away from smokestack sectors.
The unlikely combination of low unemployment and stagnating pay is not unique to China. Wage gains in the US were below forecasts in June, even with the jobless rate close to the lowest since 2001. Unions in the euro zone’s largest nations blame lacklustre pay gains on dampened expectations among workers since the region’s financial crises.
There were 1.11 vacancies per applicant at job centres in 95 cities across China last quarter, ministry of human resources and social securities data show, down slightly from 1.13 in the previous quarter. Labour demand in the commercial and leasing sector, which includes a wide range of industries, soared while financial sector demand declined. The ratio edged down in the wealthier eastern region, while demand intensified in western regions.
A similar gauge by the Beijing-based recruitment site Zhaopin.com and Renmin University’s China Institute for Employment Research rose to 2.26 in the second quarter from 1.91.
Demand for the so-called old economy may have recovered in the past quarter. Zhaopin data show labour demand in energy, mining and excavation – some of the weakest sectors for hiring – almost doubled from the first quarter while still remaining below 1. There was some recovery in the rustbelt north-east as the ratio edged up to 1.33.
Internet and e-commerce talent remains the most sought after, with 9.06 positions chasing each applicant, followed by transportation and insurance. That is consistent with the economy depending more on technology and logistics, which drove second-quarter economic growth.
Beijing was the most competitive big city for high-end jobs, according to the number of resumes received for each job via Zhaopin. Shenzhen, Shanghai and Chengdu followed.
Factories have resumed shedding workers after a pause in March, a sub-index of the official manufacturing purchasing managers’ index shows. Both the official index and a subgauge of a private PMI stayed below 50, the line separating improving and deteriorating conditions.
While the official non-manufacturing PMI indicates contraction in services and construction jobs, a private indicator from Caixin Media and Markit Economics signals an expansion.
In the so-called new economy – from law to software and pharmaceutical labs – hiring continued to expand in June, according to a labour input sub-gauge of the New Economy Index produced by Big Data Business in Chengdu.
While it is easier to find jobs, some pay gains are levelling off. For white-collar workers wages were lower compared with the first quarter, according to Zhaopin, while the pace of gains for new economy professionals stalled, according to Big Data’s indicator.
Zhaopin data also show white-collar pay cheques in 37 major cities dropped to a monthly average of 7,376 yuan (Dh4,040), the first quarter-over-quarter decline on record. Wages at the smallest companies fell 31 per cent, which means “start-ups using high salaries to lure talent is a memory”, Zhaopin said.
Professional services such as finance, accounting, law and consulting were the highest-paying sector, with an average monthly salary of 10,165 yuan, followed by firms in funds, securities, and investment at 9,475 yuan.
Such stagnation is not limited to professionals. Wage growth for migrant workers from rural areas slowed to 6.3 per cent, according to the national bureau of statistics, versus more than 20 per cent in 2011.