Analysis: Will China’s Downbeat Job Market Pick Up Soon?
By Vincent Chan
The Chinese government has sought to boost domestic demand in recent years, especially household consumption. While some have attributed the country’s sluggish consumption to a weak job market, the official unemployment rate has remained relatively stable over the past few years. This article aims to analyze this issue through data from listed companies.
At the more than 6,000 Chinese mainland companies listed on the mainland or in Hong Kong that disclose employee numbers, headcount growth has slowed significantly since 2022. By the end of 2024, these companies employed more than 38 million people, equivalent to about 8% of urban employment. From 2022 to 2024, these companies increased their employee headcounts by fewer than 2 million.
On an annual basis, employee growth in 2020 and 2021 reached 5.5% and 6.4%, respectively, but slowed gradually to 0.8% in 2024, with fewer than 290,000 net new hires that year.
Industries diverge
Before 2021, headcount growth across industries was relatively even, but afterward, differences became significant.
Listed companies in the automobile and auto parts industries appeared to be more active recruiters, adding more than 870,000 employees from 2022 to 2024, accounting for about 44% of net new hires among the more than 6,000 listed companies.
Industrial equipment firms were another major contributor, creating more than 560,000 jobs during the same period, or 28% of the total increase.
The sharp rise in employment in the automobile industry was driven by rapid growth in electric-vehicle sales, while the industrial equipment sector benefited from policies promoting “new productive forces” in recent years.
Additionally, sectors such as IT hardware, semiconductors and logistics also hired more people. The hardware and semiconductor industries are closely related to policies favoring “new productive forces,” while the logistics industry benefited from the rapid development of e-commerce during the Covid-19 pandemic.
In stark contrast, total employment in the real estate sector decreased by nearly 400,000 from 2021 to 2024 amid a prolonged market downturn. Meanwhile, the insurance sector saw some 150,000 job losses.
Looking specifically at 2024, industrial divergence became even more pronounced. Of the 290,000 net new hires last year, which was a very small number compared with previous years, 280,000 were in the automobile and auto parts industry.
Meanwhile, the real estate sector reduced its workforce by over 150,000. The semiconductor sector also saw significant job cuts, mainly because photovoltaic companies — which are classed as being under this sector — were hit by the sharp decline in product prices.
More companies downsize
In addition to employee numbers, another noteworthy indicator is the proportion of companies reducing staff.
In 2020, when the pandemic first struck, 38% of the listed companies downsized. As the economy improved in 2021, the figure fell to 34.5%. But it climbed in the following years, with over half of the listed companies cutting staff in 2024.
The fact that the majority of companies chose not to lay off staff despite a significant economic slowdown in 2020 shows they expected the pandemic shock to be temporary.
However, in spite of relatively stable economic growth in 2024, more than half of the listed companies cut staff, raising the question of whether this indicates pessimism about the long-term outlook.
While employee growth has slowed in recent years, increases in average salaries have been relatively stable. From 2022 to 2024, the average year-on-year pay rise for listed company employees was roughly between 3% and 4%, with a 2.9% increase in 2024.
These salary increases were slightly lower than China’s nominal GDP growth rates. This suggests that when revenues grew moderately, companies preferred to raise pay to encourage higher productivity rather than hiring more workers.
Breaking it down by industry, employees in the banking and financial services sectors still had the highest salaries. However, their salary growth was the slowest, with some facing pay cuts. Differences in salary growth among other industries were not significant.
Overall, data from recent years suggest that the employment environment was not very promising, and many companies were reluctant to hire new workers, largely reflecting continued weak investment confidence among businesses through the end of 2024.
This year, it remains to be seen how businesses will approach hiring amid the domestic enthusiasm for artificial intelligence applications that was sparked by DeepSeek, and trade uncertainties stemming from the China-U.S. tariff conflict. In addition, China’s macroeconomic policy adjustments since September may also play a role in the job market.
Vincent Chan is a China strategist at investment advisory firm Aletheia Capital.
This analysis has been edited for length and clarity.
Contact translator Qing Na (qingna@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
Image: Zerbor – stock.adobe.com