China’s Labour Market Stabilizes in Q2 2016

July 22, 20168:11 am914 views

Zhaopin, a leading career platform in China focused on connecting users with relevant job opportunities throughout their career lifecycles, and the China Institute for Employment Research at Renmin University released the CIER Employment Index Report for the second quarter of 2016.

The report found that the China’s labour market has stabilized in the second quarter, with confidence up slightly from the first quarter.

China Second Quarter Labour Market Highlights:

  • The labour market in China has stabilized, with the CIER index rising to 1.93 in the second quarter, from 1.71 in the first quarter.
  • The CIER index for the best-performing sector, Internet and E-commerce, was almost 47 times that of the worst-performing sector, energy/mineral/mining/smelting.
  • Driven by the new economy, sectors including internet/e-commerce, funds/securities/futures/investment, and traffic/transportation are growing rapidly, creating robust job demand.
  • Recruitment demand in the traffic/transportation sector increased by 58% year-over-year, the fastest growth rate among all sectors.
  • About 40% of recruitment demand was in first-tier cities, 28% in emerging first-tier cities and 20% in second-tier cities.
  • With government support for innovation and entrepreneurship, micro-and small-sized companies will continue to be the driving force in the labour market.
  • The CIER index will most likely go up in the third and fourth quarters, due to seasonal factors and the long-term demographic trend.

Zhaopin and the China Institute for Employment Research at Renmin University have been publishing the quarterly CIER Employment Index for seven consecutive years to review and identify trends in China’s employment market.

With data from Zhaopin’s online platform, the CIER Employment Index has become the barometer of China’s labour market and the macroeconomic environment.

The CIER index score is calculated by dividing the number of job vacancies during a specified period by the number of unique job seekers that apply to jobs during the same period. A CIER index score of more than 1 indicates that confidence is high for job seekers seeking employment. A CIER index score of less than 1 indicates that confidence for job seekers is low.

China Labour Market Stabilizing in the Second Quarter

Since the first quarter of 2015, the CIER index has been on a declining trajectory, indicating a cooling trend for the job market in China.

The CIER index rebounded to 2.09 in the seasonally-strong fourth quarter of 2015, but dropped sharply to 1.71 in the first quarter of 2016. In the second quarter, the index rose to 1.93, indicating a stabilizing labour market in China.

Excluding the effects of seasonality and changing demographics, which have traditionally resulted in a long-term increase in CIER index scores, quarterly adjusted CIER index scores have demonstrated a declining trend from the first quarter of 2015 to the second quarter of 2016.

However, the decline has narrowed significantly, suggesting that the labour market has stabilized. According to Zhaopin’s data, total online recruitment demand increased by 21% year-over-year in the second quarter, compared with a mere 4% year-over-year growth in the first quarter.

The brisk labour market demand in the second quarter is an indication that the fast growth of the new and emerging industries has offset the decline in traditional industries.

CIER Index by Sectors

The CIER index ranking by sectors remains largely unchanged in the second quarter compared with the previous quarter. However, the polarization is noteworthy. The CIER Index for the best-performing sector –Internet and E-commerce — was almost 47 times that of the worst performing sector, energy/mineral/mining/smelting.

The top 10 best-performing sectors, with a CIER Index higher than 2.1, had strong recruitment demand, while the ten worst-performing sectors had excessive job seekers and a CIER index below 0.5.

Ten best-performing sectors of Q2 2016
Sector CIER index
Internet/e-commerce 11.47
Funds/securities/futures/investment 4.24
Traffic/transportation 3.84
Insurance 3.51
Farming/forestry/animal husbandry/fishery 3.39
Agency 3.22
Professional service/consulting (finance and accounting, legal and HR, etc.) 2.81
Media/publishing/film and television/culture dissemination 2.35
Logistics/warehousing 2.16
Hotel/restaurant 2.13

 

Ten worst-performing sectors of Q2 2016
Sector CIER Index
Energy/mineral/mining/smelting 0.24
Electricity/power/water conservancy 0.27
Inspection/testing/authentication 0.29
Environmental protection 0.31
Petroleum/petrochemical/chemical 0.32
Printing/packaging/papermaking 0.33
Office supplies and equipment 0.35
Instruments/apparatuses/industrial automation 0.38
Property management/business center 0.40
Medical equipment/apparatus and instruments 0.44

In the second quarter, internet/e-commerce, funds/securities/futures/investment, traffic/transportation, insurance, farming/forestry/animal husbandry/fishery, and agency were the best-performing sectors by CIER Index rank.

Insurance, farming/forestry/animal husbandry/fishery and agency sectors have strong recruitment demand, but these jobs are less attractive to job seekers, which push up the CIER Index for these sectors. Driven by the new economy, Internet/E-commerce, funds/securities/futures/investment, and traffic/transportation sectors are growing rapidly, creating robust job demand.

CIER Index 2011-2016 and Adjusted CIER Index (PRNewsFoto/Zhaopin Limited)

CIER Index 2011-2016 and Adjusted CIER Index (PRNewsFoto/Zhaopin Limited)

E-commerce and the sharing economy, which represent the new economy, have witnessed tremendous development since 2009. Transformed by the new economy, funds/securities/futures/investment, traffic/transportation, hotel/restaurant, IT service, and medical care/nursing/beauty/healthcare sectors have also been expanding quickly. The CIER index for these sectors has been increasing steadily over the years, despite a fluctuation between 2014 and 2015.

See: China is losing its Labour-Cost Competitiveness to Emerging ASEAN Economies

The worst performing sectors by CIER index rank in the second quarter were energy/mineral/mining/smelting, electricity/power/water conservancy, inspection/testing/authentication, environmental protection, and petroleum/petrochemical/chemical, which are all traditional manufacturing industries. Most of these industries are under pressure to reduce over-capacity and relocate affected employees.

IT and internet is the sector that has benefited the most from the new economy and, as a result, the whole sector enjoyed a high CIER index rank. The recruitment demand from the internet/e-commerce sub-sector increased by 49% year-over-year in the second quarter, followed by computer software (23%) and online games (2%).

The financial sector continued to enjoy fast growth with strong recruitment demand in the second quarter. The job demand from banking increased by 48% year-over-year in the quarter, followed by funds/securities/futures/investment (30%) and trust/warrant/auction/pawn (16%).

Unlike other sectors, small and mid-sized companies (with employees from 20 to 9,999) had the most recruitment demand in the financial sector. Demand from companies with 100 to 499 employees increased by 48%, followed by companies with 20 to 99 employees (38%), companies with 1,000 to 9,999 employees (33%), and companies with 500 to 999 employees (29%).

Year-over-year change in recruitment demand from the
financial sector in 2Q16
Financial sector 30%
Funds/securities/futures/investment 30%
Banking 48%
Trust/warrant/auction/pawn 16%

Traffic/transportation sector has been booming, driven by expanding e-commerce penetration. Total recruitment demand in the sector increased by 58% in the second quarter year-over-year, the fastest growth rate among all sectors. The competition among e-commerce platforms is heating up with their coverage penetrating to small towns and rural areas around the country.

The real estate industry was edged out of the top 10 best performing sectors in the second quarter. Total recruitment demand from real estate/construction/building materials/engineering sector increased by 10% in the second quarter year-over-year.

Micro companies with fewer than 20 employees and large companies with more than 10,000 employees posted the highest increase in recruitment demand, jumping 52% and 33%, respectively. About 34% of recruitment demand was in emerging first-tier cities, more than first-tier cities (32%) and second-tier cities (21%).

CIER Index by Regions and Cities

Eastern China is still the region with the most recruitment demand for talent. In the second quarter, Eastern China accounted for 73% of total recruitment demand in the country, while Central China and Western China accounted for 12% and 10%, respectively.

The demand increased the most in Central China, up 29% in the second quarter year-over-year, followed by Western China, up 23%. Relying heavily on traditional industries, Northeast China still lags behind other regions in the economic growth and job demand. Recruitment demand in Northeast China increased by 14% in the quarter, only accounting for 5% of the country’s total.

In the second quarter, micro-sized companies with fewer than 20 employee had the highest CIER index at 3.58, while small-sized companies with between 20 and 499 employees scored the lowest at 0.61. As the spirit of entrepreneurship spread across the country, micro start-up companies have massive demand for talent, yet attract fewer job seekers, resulting in a high CIER index rank.

With government support for innovation and entrepreneurship, micro and small-sized companies will continue to be the driving force in the labour market.

Of recruitment demand in the second quarter, 41% was from small companies (with 20 to 499 employees), 31% from micro-sized companies (fewer than 20 employees), 23% from mid-sized companies (500 to 9,999 employees), and 5% from large companies (more than 10,000 employees).

Labour Market Outlook

For the second half of 2016, the labor market in China is expected to keep stabilizing. The CIER index is most likely to go up in the third and fourth quarters with seasonality factors and the long-term demographic trend.

Also read: Where Are Salaries in China Headed for in 2016-17?

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