Category News of China

Employment crisis ‘top of NPC agenda’

Discussions about the current tough employment situation will soar to “unprecedented heights” at this year’s annual parliamentary sessions, a senior lawmaker said yesterday.

“Employment will be one of the main topics at the two meetings,” Zheng Gongcheng, a member of the National People’s Congress (NPC) Standing Committee, said. “The discussions will focus on job stimulus policies and government investment to boost employment.”

Since the global financial crisis began, about 20 million migrant workers have lost their jobs. Also, about 7.5 million college graduates will enter the job market this year, with the number of jobs available at a two-year lowin the first half of the year.

The urban registered unemployment rate, which excludes migrant workers, jumped for the first time in five years to 4.2 percent as of Dec 31, the Ministry of Human Resources and Social Security said. It is expected to hit 4.6 percent this year, the highest level since 1980.

In the Monday’s government work report to be submitted to the coming NPC meeting, employment is a very important part of the central government’s future work, Zheng said.

“Priority should be given to college graduates and migrant workers,” he said.

Some experts have said the rising unemployment rate will be a threat to social stability and have urged the government to do more to create jobs.

Zheng, a scholar in social security at the Renmin University of China, said: “All the policies need huge investment. I expect the government will put more money into the employment services.”

Lenovo to cut 450 international employees

China’s largest computer maker Lenovo today said it would lay off 450 international employees in China to further reduce cost.

Those employees affected are the supporting staff of the company’s oversea business, the company said.

“In light of the global economic problems, we must act decisively to reduce costs associated with global staffing and support functions to ensure our competitive strength,” said Yang Yuanqing, Lenovo CEO, in a statement. “While our business in China remains very strong, many of our global support functions have employees based in China.”

The latest round of layoffs will be completed by the end of next month, the company said.

Dark clouds loom over the horizon for jobs

Multinational companies, which had gone on a hiring spree a couple of years back, have started to slash payrolls and freeze hiring as they struggle to stay afloat in the financial maelstrom sweeping across the globe.

Employees at many multinational firms, the most sought after employers in the past, are being bombarded with news of layoffs globally from their headquarters.

According to a survey by FESCO, a Beijing-based recruitment services provider for multinational companies, nearly 70 percent of the firms it polled have said they would trim their recruitment requirements for this year, while 27 percent said they have already started laying off employees.

FESCO polled 356 of its clients spread across the country and engaged a wide range of industries for the survey.

Over 44 percent of the HR managers surveyed admitted that their companies have slashed jobs, while 25 percent of the companies polled said they have plans to cut jobs this year, according to a survey conducted by KingField Management, a Guangzhou-based recruitment and executive search firm.

KingField surveyed 216 companies based in South China’s Pearl River Delta region, half of which are multinational companies like Dupont and Bosch, according to Ren Ge, general manager, China operations, KingField.

Finance, telecommunications and IT industries were the hardest-hit industries, according to both the surveys.

Banks, insurers and asset managers worldwide had announced 325,000 job cuts since August 2007, when the credit crisis began to intensify, according to Thomson Reuters calculations until Feb 12.

The announced job cuts in technology and information technology firms worldwide have added up to 300,000 in late January, TechCrunch’s Layoff Tracker showed on Tuesday.

Some global companies have also begun to downsize staff at their China operations, but most of them are carrying out such plans cautiously, experts said.

According to the KingField survey, of the companies that have already axed jobs, 68 percent have only cut less than 10 percent of their workforce.

“It shows that a majority of the companies are treading cautiously on cutting jobs,” said Zeng Jiangtao, senior recruitment consultant, KingField.

Companies who have cut jobs or are considering such moves can be generally divided into two groups, said experts.

“The first category has firms like Citibank, Motorola, etc. who are actually impacted by the crisis and have no other choice other than to cut jobs to avoid bankruptcy,” said Charles Lee from the Beijing office of Antal International, a UK recruitment company.

“The other section are those who are restructuring operations due to the crisis and have resorted to layoffs as part of this strategy,” Lee said.

According to Zeng, most of the companies are charting layoff plans as a pre-emptive step to ward off recession.

“Many of our clients are unable to sell their products as before and so they are not too keen on investing further in the Chinese market. If they do not invest, we, who are largely reliant on their projects, cannot afford so many overheads. So we have to cut our cost base,” said an employee at a European engineering and construction company, which is slashing jobs.

“No one knows when the crisis will end, so no one exactly knows when the layoffs will cease,” said Antal’s Lee.

He also urged employees planning to change their jobs to think twice before taking the leap.

“Nothing beats a stable job in an economic crisis. Companies are trimming people to replace existing hires with newcomers who do not cost as much. Companies that have got the mandate from their headquarters to hire people would also be permitted to lay off employees,” Lee said.

231 companies say no to pay cuts

A total of 231 local firms said they will not cut salaries this year, a survey has found.

Of the 308 companies polled by consultancy firm Mercer, 20 percent make consumer goods, 19 percent are hi-tech firms, 17 percent are in machinery and electronics, and the rest span a variety of other industries.

Sixty percent, including Lenovo, P&G, Unilever, Dupont and Wanke Real Estate, are based in major cities.

Just about six firms said they will resort to salary cuts as a means of combating the financial crisis, while 154 said they will offer lower pay rises.

The rest said they have not made a final decision yet.

Liu Jianli, director of salaries and welfare at Lenovo, said: “We don’t have any plans to cut salaries, but there will be limits on pay rises and we will be more cautious in recruiting new people.”

Xu Jun, public affairs manager at Dupont Inc in Shanghai, said it too has no plans to cut salaries.

In another survey, by Kingfield Management, 75 percent of the 216 Pearl River Delta firms polled said they will not lay off staff this year.

Forty percent said they will increase wages but by a lower percentage than last year.

With its high number of export-oriented firms, the Pearl River Delta has felt the full brunt of the financial crisis.

Last year, the central government implemented policies that allow companies to defer contributions to pension funds and make lower employee insurance payments.

Hire graduates without local hukou

In a move to further encourage companies to hire more young people, the State Council has asked every city in China – except four – to drop the permanent residency requirement when hiring non-native college graduates.

In a recent document, the State Council has asked cities, except for Beijing, Shanghai, Tianjin and Chongqing, to lift hukou, or the residency permit restriction so that applicants can move almost anywhere for a job.

The document comes after a job stimulus package was unveiled in early January intended to help college students find jobs amid the economic slowdown.

“The Chinese job market is grim amid the global financial crisis and college graduates are facing huge pressure finding jobs,” it said.

College graduates are a “valuable” human resource, and all local governments and all related departments should give top priority to the employment of college graduates with more innovative measures.”

The document also says that labor-intensive small enterprises can receive up to 2 million yuan ($300,000) in loans if they employ a certain number of registered jobless urban residents.

The major State-owned enterprises and scientific research institutions were also urged to offer more jobs for graduates.

The State Council also encouraged college students to broaden their job search and consider working in grassroots communities, central and western parts of China or SMEs, or start their own business.

The self-employed graduates can get individual small loans of up to 50,000 yuan.

An earlier report by the Chinese Academy of Social Sciences said the unemployment rate among new graduates surpassed 12 percent at the end of 2008, and that 1.5 million were without work.

According to the Ministry of Human Resources and Social Security, 6.1 million fresh college graduates will enter the job market this year.

“The employment of college students should come first in the whole employment stimulus package,” Zheng Gongcheng, the country’s leading social security scholar and senior lawmaker, told China Daily.

He said college students and their families have invested lots of money in education with high expectations for a future career.

“If many college graduates cannot find proper jobs, it is a huge waste of social resources,” Zheng said.

But most fresh job seekers want stimulus policies to be more concrete.

“I am not clear about the measures and I don’t think they have much to do with me,” Xu Baoxin, 22, a new graduate of Southeast University in Nanjing, Jiangsu province, said yesterday.

“They are too vague and the lifting of hukou restrictions may only be helpful for those who want to work in big cities,” Xu said.

Another job seeker, Tang Jianye, said the stimulus policies are a little bit late and they need more employment related services.

“It (the policy) is late but it’s better than nothing,” the graduate from Jiangxi University of Finance and Economics said.

In another step to help graduates find jobs, Beijing municipal government plans to hire college graduates as community assistants, a new position created by the local government, in a bid to encourage them to work at grassroots level.

Companies to inform govt of layoffs 30 days prior

As layoffs and labor disputes become frequent with the global economic slowdown wiping out more businesses, the central government yesterday told employers to inform trade unions of their plans of mass layoffs at least 30 days in advance.

If a company plans to layoff more than 20 employees, or over 10 percent of the total staff in one go, it must submit written reports to the local labor and social security department 30 days prior to the action, the State Council said in a statement issued on its official website (www.gov.cn) yesterday.

The State Council emphasized that priority should be given to ensure the legal rights of the employees.

Moreover, employers should not refuse to pay for social insurance as long as the working relations still exist, it said.

Local labor officials should keep a watch on such companies to ensure employers do not flee or postpone wages and insurance payment, it said.

Mo Rong, deputy chief of the labor science research institute under the Ministry of Human Resources and Social Security, said stable employment should be the top priority under the current financial circumstances.

“In the long term, mass layoffs are not good for the development of an enterprise,” he said.

The government has launched a series of favorable policies “to either reduce or postpone five types of social security insurance fees to give private enterprises some relief”, he added.

“The State Council’s notice reiterated the regulation of Labor Law, and it is a good reminder to both enterprises and employers,” Li Kui, a lawyer of the Beijing-based Yingke Law Firm, told China Daily.

“But I hope the regulation would be further clarified, as different scales of companies and official organizations that manage layoffs need to be more clear,” he said.

Meng Qinghuan, an employer of a Beijing-based fund management company, said he was doubtful if the new regulation would be implemented successfully.

“Some small enterprises have no ability to anticipate the crisis and go bankrupt overnight,” he said.

Rising unemployment a key challenge for China

Rising unemployment rather than economic slowdown appears to be the biggest challenge for the Chinese economy this year, according to economists.

According to a report by China Economic Monitoring and Analysis Center, over 90 percent of the 100 economists surveyed expressed the view that the growing number of jobless is the top challenge for the economy, followed by economic slowdown and social instability.

The survey, conducted in December, also revealed that economists’ confidence in the economy has dropped to its lowest since 2004, when it was first introduced.

“The survey results show that government policies should be directed at addressing unemployment,” said Lin Yixiang, chairman and CEO of TX Investment Consulting Co, which helped to conduct the survey.

The rising concern over unemployment also underscores the gloomy prospects of the nation’s job market. Over the past few months, more than 20 million migrant workers, or a sixth of the total, have lost their jobs due to the economic slowdown.

Policymakers also forecast the registered urban unemployment rate, which excludes migrant workers, will hit 4.6 percent in 2009, up from 4.2 percent in the fourth quarter of 2008.

China’s economic growth dropped to 9 percent in 2008, compared with 13 percent of 2007. The International Monetary Fund has predicted that the nation’s growth would further decline to 6.7 percent this year, far below the long-time 8 percent target of the Chinese government.

As a response to the economic slowdown, the government announced a 4 trillion yuan stimulus package last November to prop up the weakening economy. Meanwhile, it’s also drafting a plan to bolster the development of 10 key industries. Policymakers later said in January that they plan to spend 850 billion yuan by 2011 to provide accessible and affordable healthcare to the country’s 1.3 billion people.

A total of 86 percent of the economists said the government’s fiscal policy should focus on social spending, including education, medical care and improving the social security system. Economists also want the government to reduce direct investment in infrastructure projects, due to concerns about misallocation of resources and corruption.

More than 70 percent of the economists surveyed believed that the Chinese economy would continue to lose steam this year with the lowest point likely to occur in the second quarter. Three-fifths of the economists said the global economy would only start to recover in 2010.

China to train jobless graduates as crisis bites

BEIJING (Reuters) – The Chinese government will help train 1 million unemployed university graduates over the next three years and will give loans to companies who hire them, state media said on Sunday, as the economic crisis starts to bite.

Premier Wen Jiabao warned earlier this month that college graduates face a “grim” job market as a global slowdown seizes the economy.

Now the State Council, or Cabinet, is offering training and loans to help graduates, the official Xinhua news agency said.

Students loans will be waived either partially or in full for graduates willing to work in rural areas or join the armed forced, the report said.

The government will also offer loans of up to 2 million yuan ($292,400) to labor-intensive companies who recruit graduates, it added.

And loans of 50,000 yuan each will be given to graduates who want to set up their own business, Xinhua said.

China has more than economic reasons to fear surging graduate unemployment. It is also a potential political time bomb.

This year will mark the 20th anniversary of the crackdown on pro-democracy protests led by radicalized students. Unsettling discontent could spread again as millions of graduates, whose families have paid steeply for their education, look for work.

The government has encouraged more students to go to university as a way to boost skills and consumer spending, but at the end of 2008 about 1 million of that year’s graduates had not found work.

With some 6.1 million students leaving colleges and universities in 2009 — about half a million more than last year — labor authorities have repeatedly warned them not to be fussy.

McDonald’s to open 175 outlets in China, hiring more than 10,000

BEIJING (Xinhua) — McDonald’s China announced on Wednesday an expansion plan to set up 175 new outlets and create more than 10,000 jobs this year on the Chinese Mainland despite global economic downturn.

The expansion was the largest of its kind ever made by McDonald’s across the world.

“The move will bring more opportunities for cooperation to food-related industries in China,” said McDonald’s China CEO Jeffrey Schwartz.

The US-based food chain store group has 50 suppliers in China, with more than 95 percent of its food materials coming from local market.

On the same day, the group announced its decision to launch a 16.5 yuan (about $2.4) discount meal in its Chinese outlets.

“The price is even lower than that of a similar product in this market a decade ago,” said Schwartz.

He added the company’s management of material supply and its increasing presence in China helped cost control and made the big discount possible.

McDonald’s has opened more than 1,050 outlets in China in the past two decades.

China advances vocational training to help laid-off workers

About 4 million laid-off worker in China attended vocational training for reemployment in 2008, the Ministry of Human Resources and Social Security said Monday.

Another 400,000 received education to start self-employed business, which encouraged individuals to be their own bosses and make a living, the ministry’s spokesman Yin Chengji said.

“We have set up special funds and are using social unemployment benefits to strengthen training for workers. We also emphasize vocational training for the laid-offs, especially the migrant workers,” Yin said.

He said the training would cushion the impact of the global financial crisis and was aimed at stabilizing the employment situation in the country.

East China’s Shandong province had organized training programs for 230,000 laid-offs last year, and 75 percent of those trained found new jobs, according to local government figures.

The Ministry of Finance also said in mid-January it would play a leading role in creating jobs in government-initiated projects such as civil infrastructure building and environmental protection.