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Economy

China's job market slows as IT and property sectors retrench

Trade tension also threatens to dim outlook for manufacturers

Employees scan boxes and parcels at an express delivery company in Harbin, Heilongjiang province. Companies like food delivery app provider Meituan Dianping have trimmed staff.   © Reuters

SHANGHAI -- The Chinese employment market is showing signs of losing steam as information technology and real estate companies cut back on hiring, with manufacturers likely to follow suit if Beijing and Washington fail to ease their trade tensions in the coming months.

Job listings on the Zhaopin website decreased 27% on the year in the July-September quarter of 2018 as internet-related companies and real estate businesses slowed recruitment. The ratio of openings to applicants has fallen to the lowest in three years, signaling weakness in employment. Listings at 51job reportedly tumbled from 2.85 million last April to 830,000 that September.

A survey of 1,200 companies by the Liepin job site in the October-December quarter showed that 21.3% plan to scale back hiring, up 5.4 percentage points from a year earlier. In addition to slowing hiring, companies are moving to downsize through such steps as reallocating personnel.

Many companies in the tech sector, once a driver of job growth, are now saddled with losses. Video-streaming site Douyu is expected to reduce workers based in the southern city of Shenzhen by 70. Food delivery app provider Meituan Dianping has decided to trim its staff by 0.5%. The company, which went public in 2018, has been bleeding losses in fierce competition with an Alibaba Group Holding unit.

The real estate sector is also struggling. China Fortune Land Development, which operates mainly in Beijing and Hebei Province, is apparently reducing its staff by between 900 and 1,000. Tahoe Group has asked a portion of new hires for 2018 to switch to sales if they want to stay. Property markets in large cities like Beijing, Shanghai and Guangzhou have hit a ceiling, impacting the market for jobs in the industry.

The official unemployment rate has been relatively low, hovering around 5%. But critics say the figure does not reflect reality.

With consumer spending losing momentum in China, retail sales growth has fallen to the lowest in 15 years. Sluggish growth in stock and property values is making people frugal. Consumption could slow further if a weak employment market starts to weigh on wages.

The precise impact on the market for manufacturing jobs is a focal point going forward. Smartphone-related industry is coming under clouds on the back of the trade war with the U.S. and slowing sales of Apple products.

Taiwan-based Hon Hai Precision Industry, the Apple assembler known as Foxconn, is expected to slash mainland China factory workers by 100,000 under a plan to re-examine groupwide operations. Biel Crystal Manufactory, a smartphone glass maker in Huizhou, Guangzhou Province, this past November refrained from extending contracts for an estimated 5,000 factory workers. Dozens stormed the factory in protest, saying they did not receive advance notice.

China and the U.S. have entered into a cease-fire in their trade war, with a promise to carry out negotiations through March 1. But if frictions heighten again, Washington could put Chinese-built smartphones on its list of goods subject to additional tariffs.

On top of all this, a change in social insurance premium collection is expected to raise costs for employers, prompting some to shrink payrolls. With that responsibility fully shifting from local social security agencies to local tax authorities on New Year's Day, collection for workers like migrant laborers is expected be more thorough. Social insurance premiums are not-insignificant costs to employers, coming to about 30% of wages.

Beijing is taking steps to underpin employment. In a guideline released Dec. 5 by the State Council, China's cabinet, the government laid out plans to refund 50% of unemployment insurance premiums paid in the previous year by companies with few or no layoffs in 2019.

At the Central Economic Work Conference of government and Communist Party leaders through Dec. 21, employment was the first of six focus areas for stabilization, including trade, investment and the financial sector.

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