Working for a Company, or About to? These Shifts in This Year's Job Market Deserve Your Attention

Slower economic growth and companies and industries in transition have left the outlook for both hiring and pay raises rather gloomy

Does it feel harder to change jobs this year? Has a friend complained to you that job-hunting is tough? You are probably not imagining it.

Zhaopin forecasts a job-market index of 2.09 for 2016. That is slightly better than the third quarter of last year, but it is not a good number. (The index uses 1 as the dividing line: the higher the figure, the healthier the job market.)

According to the ManpowerGroup Employment Outlook Survey, only 7% of employers said they planned to hire and add staff in the first quarter of 2016 — the weakest first-quarter outlook in ten years.

Foreign data firms and media have noticed too. The CEO of Quanton Data, a New York data company, told QDaily that across the more than 100 Chinese websites it monitors (he would not say which), large companies (1,000+ employees) have hired markedly less since November 2015; in January this year, hiring was down 11.5% year over year.

In 2015 China's GDP growth fell below 7% for the first time in 15 years, and research firms forecast it will slow further, to 6.66%, in 2016. This is seen as one of the main reasons the job market has cooled. Companies use GDP growth as a key benchmark for raises, and last year pay in many industries did not even keep pace with it. Raises this year are forecast at around 8% — again, not encouraging. National Bureau of Statistics data show that average urban pay rose more than 12% in both 2011 and 2012.

Guo Sheng, CEO of Zhaopin, sees another trend: more people are actively looking for work. With the economy sluggish and raises small, "this means people feel insecure, and the pressure to find a job is growing."

Last year was also unsettled for investors, industries and companies alike. Traditional industries were reinventing themselves, and internet companies kept merging and consolidating; all of this has quietly shaped the job market. More and more people came to believe the loud talk of a "capital winter" and an internet bubble — especially after Alibaba and Baidu "cut back on hiring" at the end of last year and sent a gloomy signal.

Campus recruiting is also growing more slowly than hiring of experienced workers, so new graduates will find it harder than seasoned professionals to land the job they want. When the economy is weak, companies prefer experienced hires to save on labor costs.

But don't be too pessimistic. Overall hiring is still growing, only more slowly than before. There are still plenty of openings; the odds of finding a good one are simply lower.

Then again, finding a job you are truly happy with has never been easy, at any time. If you work for a company, or soon will, these shifts in this year's job market may be worth your attention.

Internet companies, once the hottest employers, are hiring more cautiously

For years the internet industry has led every other sector in hiring volume, pay raises and appeal to talent. Talent, after all, follows the boom. According to Zhaopin, hiring demand from the internet economy and the traditional economy now stands at roughly 6:4.

But you probably remember two "big stories" from last year: Alibaba suddenly handed out fewer campus offers, and Baidu stopped hiring experienced workers (reportedly, joining required Robin Li's personal sign-off). Both caused a stir at the time.

Everyone wondered: had the economic winter really arrived? Was the internet bubble about to burst?

There is no need for such alarm. The internet companies led by BAT (Baidu, Alibaba and Tencent) are not in trouble; they are consolidating and restructuring. After years of rapid growth they no longer need so many hands, so they have stopped hiring on a large scale.

Justin Ren, an associate professor of operations and technology management at Boston University, thinks this may be part of an industry cycle. China's leading internet companies, such as Alibaba and JD.com, are expanding abroad, and that calls for new senior talent rather than large numbers of junior engineers.

Wang Weiyi, Alibaba's senior director of human resources, told China Daily: "To become a global company, you need to build an excellent team with international backgrounds and a global mindset." In other words, Alibaba wants senior people who have worked in different countries.

Guo Sheng of Zhaopin made the same point in an interview with QDaily. Asked about internet companies hiring fewer people, he said: "What we're probably seeing is a signal of internal adjustment at these companies, not a signal that the overall market is bad. I think mostly they want to raise the quality of their staff and reorganize."

That may be bad news for new graduates: entry-level jobs are shrinking, and getting into the big companies is harder than it was a few years ago. They want more people with work experience. Of the more than 30 million job listings 51job published last year, fewer than 10% were aimed at new college graduates.

Still, BAT is seen as the bellwether of the internet industry, and its signal of "fewer hires" makes people nervous: "People think that if even BAT is struggling, everyone else must be worse off," Guo said. In fact, the number of jobs BAT itself offers is small in the economy as a whole. What is beyond doubt is that the internet industry has entered a period of adjustment and no longer hires as aggressively as it did.

Companies merge and split, but frontline jobs barely notice

Didi swallowed Kuaidi, 58.com and Ganji teamed up, Qunar merged with Trip.com Group, Meituan joined Dianping... In 2015 one merger followed another at a dizzying pace. According to PEdata, run by Zero2IPO Group, China completed 2,110 mergers and acquisitions in the first three quarters of 2015, up 60% year over year; the 1,716 deals with disclosed values totaled US$139.288 billion, up 53%.

For the job market as a whole, these mergers have mattered little. Merged companies may reshuffle some staff — finance and HR teams may need to be combined, for example — but so far most merged companies still run independently, and most frontline jobs have not been touched.

Take O2O (online-to-offline services): companies are always short of frontline staff, and the job changes that mergers cause fall mostly on middle and senior management. After Didi and Kuaidi merged, some Kuaidi executives cashed out and left. After Youku and Tudou merged, Wang Wei took his management team and founded Light Chaser Animation. After 58.com and Ganji merged, Ganji vice president Chen Xu, head of product Huo Liang and other executives left.

But because senior executives rarely make up more than 1% of a company's staff, even heavy turnover at the top has little effect on the overall market.

Nor do these people struggle to find somewhere to go. The wave of departures that consolidation set off has, in fact, made the talent market more fluid. Founders mostly turn to investing or cash out; senior executives start their own companies; professional managers move between industries. Even rank-and-file employees produce plenty of entrepreneurs: many take what they have seen and learned in first-tier cities back to second-, third- and fourth-tier cities and set up small businesses.

Among the ten industries with the most job openings, internet and e-commerce posted 32% more positions. O2O has created a great many jobs in recent years, but consolidation has cut hiring in O2O and P2P lending well below previous years.

As big companies transform, people in their 40s may struggle to find work

Another undercurrent in the job market comes from big companies changing course, and Wanda is the clearest example. In 2016 Wanda announced deep job cuts in its real estate business — reportedly 30,000 to 50,000 people. Wanda, which had not lowered a target in ten years, cut its real estate sales target by 40% and expects services to contribute 55% of both revenue and net profit. In Wang Jianlin's own words: "By the end of 2016, Wanda will no longer be a real estate company."

Moving from commercial property into information, entertainment and tourism naturally changes what kinds of staff a company needs and how they are organized. But in raw numbers, people leave one part and join another, and the total changes little. And whenever an industry giant like Wanda transforms, rivals get a good chance to poach. Employees with top-tier industry experience can quickly find a new employer and avoid a long gap between jobs.

51job data show that demand for staff in commercial real estate peaked in 2014 and has been falling since. "Even though the economy isn't doing especially well, big companies are still willing to spend on people. Keeping up the pace and scale of senior hiring helps them expand overseas and grow later on," said Feng Lijuan, 51job's chief human resources expert. Top managers who understand both the international and domestic markets, as well as their industry, are always in short supply, she believes.

Many big companies are now in the middle of transformation. Their old management methods, and the knowledge and skills they expect from staff, face many new demands — marketing jobs on social media platforms, for example, have multiplied — and finding the right people has become considerably harder.

Many companies now prefer to hire people with at least three years of experience, but Feng Lijuan said that non-specialists in their 40s are struggling to find work: "Once they lose their jobs, it's hard to say whether their knowledge, experience and connections can still keep up with the way things work now."

So in Guo Sheng's view, the edge for job seekers today is "+internet": professional skills plus the ability to solve problems the internet way. Someone in brand marketing, for instance, should understand new technology.

More jobs overall, but college graduates still struggle to find work

The long campus recruiting season only gets serious in March. The fourth quarter, when interviews are packed together, looks busy, but no more than 10% of students actually secure a job before Chinese New Year. Feng Lijuan said that by March of the following year, most students have settled whether to keep studying, take the civil service route or start work; the second quarter is the peak season for signing campus hires. Last year 51job ran campus recruiting for more than 700 companies, up from just over 500 the year before. The number grows every year, and grew fastest in 2011 and 2012.

Judging by both the stubbornly high rate at which graduates back out of signed offers and the yearly growth in job listings, today's graduates have more job opportunities and more career paths open to them than ever: more than 400,000 companies are recruiting new graduates. Yet graduates' experience of job-hunting runs counter to what the hiring data say.

Graduates today are pickier than before, and their idea of a "good" job is changing. Not too much travel, not too much overtime, a certain salary... "For example, if the office isn't in the city center, it's very hard to hire," Feng Lijuan said. "Graduates' career expectations don't match the real market the way they did a few years ago. The two are drifting further apart."

On one side, graduates expect a lot from their first job, and what they want is increasingly varied. On the other, as economic growth slows, employers face pressure on costs and profit margins, and starting pay for graduates is rising more slowly. So the gap between the two sides has grown much wider in recent years.

By sector, services made up more than 70% of Shanghai's economy last year, and according to 51job, the ten job categories with the most openings are all in services. The mass movement of people around Chinese New Year left big post-holiday staff shortages in restaurants, retail, customer service and sales.

In the week after Chinese New Year 2016, hiring in the ten cities with the most openings rose an average of 15% year over year. Suzhou overtook Xi'an to post the biggest increase, followed by Shanghai; Xi'an was the only city where hiring fell below the same period last year.

But this has little to do with what graduates are looking for. Basic jobs in restaurants, retail and trade do not require much education, and customer service, the category in greatest demand, is usually work graduates consider beneath them.

On top of that, 80% of China's hiring demand comes from private companies. Whether they are hiring or laying off, they reflect the state and direction of the economy more vividly and quickly than anyone. But most of their openings for experienced workers ask for 7-8 years of experience, and more than 80% ask for at least three.

By industry: services are hot, manufacturing is cooling

ManpowerGroup publishes its Employment Outlook Survey every quarter. In its forecast for the first quarter of 2016, made at the end of last year, employers in finance, insurance and real estate had a poor outlook: only 2% planned to hire.

Manufacturing is another industry that will not add many workers: only 5% of employers plan to hire. We have previously analyzed how manufacturing is moving abroad: as factories relocate to cheaper places such as Southeast Asia and Africa, jobs naturally disappear. Beyond light industry, related sectors such as machinery and heavy industry are also hiring less. This trend began two or three years ago; it is simply continuing.

The internet industry is hiring more slowly but remains in demand. Besides "pure" internet companies, traditional industries such as clothing, food, education and media are going digital: building e-commerce operations and websites, expanding online business, and adapting to how consumers now shop and communicate electronically. So they need many IT workers.

In ManpowerGroup's data, 10% of service companies plan to hire more staff. You can probably sense how hot services are from the ever more specialized services around you: home cleaning, chefs who cook in your kitchen — services that were once rare are now increasingly common.

This reflects the changing structure of China's economy. According to 51job, in the ten cities with the most job listings, services account for more than 70% of output. In first-tier cities such as Shanghai and Beijing, services contribute more than 80% of GDP. Industries such as O2O have created more demand for offline workers.

For now, services as a whole still offer a huge number of jobs, and the number keeps growing — though, here too, more slowly.

Finally, the hottest jobs right now

Graphics: Xie Yu, Cheng Yang