China’s labour market remains tight and unemployment low. But, like in the US, Europe and elsewhere, wages growth isn’t reflecting that strength.
Official and private gauges show demand for hiring remained healthy in the second quarter, with even the weakest regions and sectors recovering. Yet white-collar pay edged down from the first quarter and pay raises for the nation’s 281 million migrant workers also narrowed.
While conditions like these may be good for companies’ payroll costs, they also give less spending power to consumers who play an increasingly crucial role in generating economic growth.
Technology is seeing the most demand for talent and professional services pay the best, positive signs for industries that the government is relying on to rebalance the economy away from smokestack sectors.
The unlikely combination of low unemployment and stagnating pay is not unique to China. Wage gains in the US were below forecasts in June, even with the jobless rate close to the lowest since 2001. Unions in the euro-area’s largest nations blame lacklustre pay gains on dampened expectations among workers since the region’s financial crises.
There were 1.11 vacancies per applicant at job centres in 95 cities across China last quarter, Ministry of Human Resources and Social Securities data show, down slightly from 1.13 in the prior quarter. Labour demand in the commercial and leasing sector, which includes a wide range of industries, soared while financial sector demand declined. The ratio edged down in the wealthier eastern region, while demand intensified in western regions.
Internet and e-commerce talent remains the most sought after, with 9.06 positions chasing each applicant, followed by transportation and insurance. That is consistent with the economy depending more on technology and logistics, which drove second-quarter economic growth.
Factories have resumed shedding workers after a pause in March, a sub-index of the official manufacturing purchasing managers index shows. Both the official index and a sub-gauge of a private PMI stayed below 50, the line separating improving and deteriorating conditions.
While the official non-manufacturing PMI indicates contraction in services and construction jobs, a private indicator from Caixin Media and Markit Economics signals an expansion.
In the so-called new economy – from law to software and pharmaceutical labs – hiring continued to expand in June, according to a labour input sub-gauge of the New Economy Index produced by Big Data Business Co in Chengdu.
Such stagnation is not limited to professionals. Wage growth for migrant workers from rural areas slowed to 6.3 per cent, according to the National Bureau of Statistics, versus more than 20 per cent in 2011.