China Labor Market Continued to Improve in the Second Quarter of 2017

As China’s overall economy grew steadily in the second quarter of 2017, the labor market became more favorable for job seekers with increasing labor demand, and a decline in job applicants, according to the CIER Employment Index Report for the second quarter of 2017, released by Zhaopin Limited and the China Institute for Employment Research at Renmin University.

In the second quarter of 2017, the economy in China continued to grow with the GDP increasing by 6.9% year-over-year. The CIER index for the labor market rose to 2.26 in the second quarter of 2017, up from 1.93 during the same period of 2016 and 1.91 in the first quarter of 2017. The rising CIER index was caused by increasing labor demand, and a decline in job seekers in the second quarter.

The improving economy had created more job demand in the second quarter this year, especially in the booming new economy driven by internet and e-commerce. After the peak season for job hopping in the first quarter, many job seekers already found new jobs, which led to the decline in job applicants in the second quarter of 2017. The rising CIER index indicated that the labor market in China became more favorable for job seekers.

While the combination of stronger labor demand and fewer applicants may mean more opportunities for those on the hunt for a job, it's not translating into higher pay at the moment.

On July 17, 2017, Zhaopin reported that the average monthly salary for white-collar workers was RMB7,376, in the second quarter of 2017, down by 3.8% over the first quarter, based on online job postings in 37 key cities in China. This was the first time that the average monthly salary declined quarter-over-quarter since the second quarter of 2015.

The falling average salary for white-collar workers was mainly caused by a 31% decrease in average salaries at micro-sized companies. With investment waning, many small start-ups became more rational and could no longer offer higher salaries to attract talents.

An additional factor contributing to the overall decline in salaries in the second quarter of 2017 was that more jobs were located in lower-tier cities, where pay is normally lower.

In addition, while online recruitment demand continued to gain, the pace of growth is slowing. According to Zhaopin's data, total online recruitment demand in China rose 36% year-over-year in the second quarter of 2017, compared with a 52% year-over-year growth in the first quarter of 2017.

CIER index by sectors

The internet/e-commerce sector continued to be the best-performing sector in the second quarter of 2017, with recruitment demand far exceeding the number of job seekers.

The real estate/construction/building materials/engineering sector was also booming in lower-tier cities, pushing the CIER index for the sector to 3.83 in the second quarter of 2017, from 2.78 in the first quarter this year.

The gap between the best-performing sectors and the worst-performing sectors actually narrowed in the second quarter of 2017 as the restructuring of the economy began to show some results.

The CIER index of the energy/mineral/mining/smelting sector rose to 0.60 in the second quarter of 2017 from 0.32 in the first quarter this year.

The traffic/transportation sector enjoyed the highest increase in job demand among all sectors, with 55% growth in the second quarter of 2017 year-over-year, as the government gave priority to the sector and invested heavily to build transportation infrastructure across the country.

The IT and internet sector saw growth in job demand slow in the second quarter of 2017. The job demand from this sector increased by 36% year-over-year in the second quarter of 2017, compared with a 56% growth year-over-year in the first quarter this year.

As investors became more rational, many start-ups in the sector could no longer "burn money" for fast expansion.

The financial sector was far below the national average in job demand, with only 6% growth year-over-year in the second quarter of 2017.

The job demand in the first-tier cities fell by 4% in the second quarter. To ensure financial stability, the central bank and regulatory departments took measures to bring financial risks under control.

The real estate sector continued its fast growth in job demand, with a 55% increase year-over-year in the second quarter of 2017. While big cities imposed restrictions on the real estate market to curb bubbles, second-tier and third-tier cities encouraged sales to reduce stocks.

CIER index by regions and cities

In the second quarter of 2017, Eastern China continued to enjoy the highest CIER index score of 2.03, followed by 1.76 for Central China and 1.67 for Western China. Among all regions, Central China had the fastest growth in job demand at 61% year-over-year in the second quarter of 2017.

With the recovery of steel and coal industries, Northeast China saw its CIER index rise to 1.33 in the second quarter of 2017, from 1.17 in the first quarter this year.

The CIER index increased for cities of all tiers in the second quarter of 2017. Emerging first-tier cities were creating more job demand with fast growth and becoming more attractive to talents. The job growth of first-tier cities were slowing down with saturated labor markets.

CIER index by size of companies

In the second quarter of 2017, the CIER index grew for companies of all sizes year-over-year, except for micro-sized companies. Many of these micro-sized companies were start-ups. With a decline in investment this year, some start-ups were struggling to survive.

The CIER index is very likely to increase significantly in the third quarter of 2017 due to strong seasonal factors.

 

 

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