Employers Snap Up New-Economy Workers, Yawn at Fresh Grads
As Chinese universities unleash thousands of fresh graduates into the workforce with the end of the academic year, this week seems like a good time to look at the latest hiring and salary trends. The picture this year reflects an increasingly complex employment landscape, with a two-track system emerging as Beijing tries to offset slowing growth in manufacturing and other traditional sectors by promoting new-economy services.
That trend is seeing certain jobs experience explosive growth, with the financial and high-tech sectors at the heart of that trend. At the same time, many others industries that used to be China’s bread-and-butter are stagnating, meaning jobs are more competitive and wages aren’t going anywhere fast. The overall picture also looks somewhat bleak for fresh grads, most of whom lack experience and are becoming increasingly copious under the nation’s oversized higher education system.
This new landscape is somewhat new for China, though it’s hardly unique for more mature Western markets. Manufacturing jobs in my native U.S. have been drying up for years, even though President Donald Trump is trying to reverse that inevitable trend by picking trade fights with just about every country imaginable. At the same time, more highly skilled jobs in service sectors like finance are picking up much of the slack.
China’s landscape isn’t exactly like the U.S. or other Western countries just yet, but instead seems to be somewhere in between a more typical developing market and a more mature one. While market forces are partly at play as China’s economy grows and becomes more skilled, government policies that strongly promote certain sectors such as new energy, and technologies like artificial intelligence (AI) are also adding a uniquely made-in-China element to the equation.
Regular readers will know that I’m somewhat skeptical when it comes to Beijing’s flavor-of-the-day approach to development of new areas. My skepticism probably runs highest when it comes to campaigns like the current Belt and Road Initiative, which looks mostly like China’s way of keeping its infrastructure companies busy building projects overseas to offset a slowdown in demand for such services at home.
I’m similarly skeptical of campaigns pushing development of technologies like blockchain and AI. That’s not because such technologies aren’t important, but more because such campaigns tend to result in huge explosions of new companies and poorly designed products flooding into the market as everyone tries to seize generous subsidies and other incentives coming from Beijing.
All skepticism aside, the flood of money and startups into these spaces creates very real jobs, even if many of those could easily disappear in a few years when inevitable consolidation occurs. At the same time, the financial services sector is also experiencing its own explosive growth as Beijing opens the area to private investment, which is mostly pouring into a new group of financial technology (fintech) companies offering banking, insurance and other services over the internet.
One other element driving the financial sector’s growth has been an explosion over the past year in capital raising, both from private equity and initial public offerings (IPOs). That has injected billions of dollars into many of these startups, which are more than eager to spend their new wealth on handsome salaries for the right workers. The IPO explosion has also created big demand for people with related backgrounds, meaning it’s quite the employee’s market right now for just about anyone with any financial services skills.
All that said, we’ll spend the remainder of this column looking at specific hiring and salary trends, both in slower-growth areas and also in hotter ones. The hottest areas are clearly seeing the biggest growth, with most of my sources saying salaries in such fields are increasing by around 20% or more each year.
One of my contacts at a major fintech company said their salaries have been rising by 20-30% annually in the last year or two. What’s more, his company can only attract skilled new employees by offering 18-month pay packages, equating to 12 months of salary plus a six-month bonus at the end of each year. He noted that his company’s own IPO last year has been both a blessing and a curse, since it provided lots of new money for expansion, but also raised the company’s profile and made it a target for poachers.
Another contact in financial services noted similarly rising costs for skilled employees, adding that annual raises for existing employees are also relatively high at around 10%. But he was also quick to note that wages for unskilled entry-level workers have stayed relatively flat over the last couple of years, since the market is quite well-supplied in that regard. One of the more traditional companies I polled gave similar feedback, noting that entry-level salaries were relatively flat from past years and annual raises were relatively modest in just the 1% to 4% range.
Several sources also pointed out that demand for people with bilingual and other international skills is also heating up, with Belt and Road projects and a broader globalization push by Chinese firms driving that trend. Areas seeing similar growth come from some of Beijing’s other priorities, with one report pointing to automation and robotics as sectors where demand and salaries were growing quickly.
Like I said at the outset, many of these trends are quite common in developed markets, with demand especially strong in emerging areas like distance-based services and online finance. The main difference in China is a government angle that tends to exaggerate demand in certain new areas. That means anyone who chooses a career in such sectors today based on the latest trends could end up in the slow lane just a few years from now when Beijing and its herd of corporate followers move on to the next big thing.
Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to DougYoung@caixin.com
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