Job website: Firing easily can help China labour mart
CHANGING China’s labour laws to let companies fire workers more easily is one of the best ways to improve economic efficiency and create new jobs for people laid off from state-run enterprises that are cutting positions to help rein in excess capacity.
That’s the prescription from chief executive officer Evan Guo of Zhaopin Ltd, operator of one of the country’s biggest job websites.
Underemployment, lack of labour mobility and skill mismatches were big problems for the labour market even as employment appeared relatively strong and steady, he said.
“Laying people off is always hard, but you can’t solve the problems by not letting people go,” said Guo “There should be better channels to mobilise talent and labour across regions and firms.”
Chinese authorities see mass layoffs as especially toxic and want to avoid them to reduce the risk of social unrest. That’s a concern for officials who also must balance the desire for stability with the need for unprofitable state-run businesses to fire employees who aren’t needed.
This keeps people in the wrong
and want to avoid them to reduce the risk of social unrest. But this keeps people in the wrong jobs and makes the labour market less dynamic. Bloomberg pic
jobs and makes the labour market less dynamic just when it needs to be more fluid amid a broader economic rebalancing.
Fired workers are legally entitled to one month’s pay for each year of service, up to a maximum of 12 years.
In the event of cutting more than 20 jobs due to economic conditions, companies must first get approval from local government officials.
Slim compensation packages have spurred protests and sometimes violence.
Companies are often reluctant to fire even in hard times, according to Zeng Xiangquan, who’s been producing a quarterly job market report based on Zhaopin.com data for the past seven years. Instead, they cut pay and hours or push early retirement.
“Underemployment is the real problem,” said Zeng, a labour economist at Renmin University, here. When underemployment is factored in, “the job market outlook in China is really grim”.
Another complication, Guo said, was that companies cut pay or hours partly to force workers to resign because dismissing them could be very expensive and difficult.
That’s in line with views expressed by some top officials. Labour laws “aim to protect workers, but hurt some of them instead”, said Finance Minister Lou Jiwei in March.
It was difficult for companies to fire unneeded workers under current laws, he said, adding that such conditions reduced opportunity for job seekers because it left fewer openings.
For Guo, watching the job ads is a solid leading indicator for the future of the world’s second-largest economy, and a better gauge than the official government data. The official unemployment rate has been almost completely unchanged since 2010.
“People may tell the weather by listening to what the forecasters say,” said Guo said. “But I’ll check whether the ants are moving on the ground.” Bloomberg
TOXIC: Underemployment, lack of mobility and skill mismatches are big problems