Recruiting in China

Summary: With record numbers of college graduates and an economic slump, fresh college grads are beginning to favor jobs in civil service or at state-owned enterprises rather than at foreign and other private companies. But they’re finding nepotism to be a critical barrier to entry.

The majority of university students graduating this year were born in 1990 and 1991, meaning the “Post-90s Generation” is entering the real world. But this entrance hasn’t been a very welcoming one.

A record 6.99 million-strong graduating class paired with an economic slump has resulted in what’s been deemed the worst job-hunting season in history. As of the beginning of June, only 33 percent of these graduating seniors had signed employment contracts.

Many of those Post-90s graduates are still watching and waiting. In order to satisfy their families (and perhaps potential spouses) they need to find a good secure job. Surveys show that the most preferred jobs are civil servant posts or in state-owned enterprises. However, these jobs often depend more on personal connections than actual skills.

“The challenges are big for individuals relying on their own efforts to find their ideal work and life,” said Tang Jun , secretary-general of the Social Policy Research Center at the Chinese Academy of Social Sciences. “Most people don’t feel much hope.”

The Nepotism Hurdle

Chen Ming was born in 1991 in a village near Nanchong, Sichuan Province and is graduating from China Agricultural University in Beijing this year. He was recently struggling to find a job and contemplating whether to stick it out in Beijing or go back to his hometown. He failed the entrance exam for graduate school and had been rejected by several companies he applied to.

“My parents didn’t have good opportunities in their time,” Chen said. “They’re hoping for me to make a change.”

A survey by the William Mercer consulting agency shows that the number of graduates this year increased by 190,000 compared to 2012, but company recruitment has dropped. Of the companies surveyed, 45 percent have no campus recruitment plans this year, and among those who are recruiting, only 70 percent are offering as many jobs as they did last year.

Meanwhile, the scale of civil servant recruitment is expanding. The number of civil service positions was 9,763 in 2011, 10,486 in 2012 and 12,927 this year. The number of people taking the civil service exam went from about 900,000 in 2011to 1.12 million this year.

Zhao Qi, another graduating student in Beijing, doesn’t feel the same pressure Chen Ming does. His father is an official in a northeastern Chinese city. This summer Zhao plans to travel in the U.S. for a month and then continue his study in Hong Kong for a year.

One of Chen Ming’s classmates has had similarly good luck. The classmate’s father, also a government official, has secured him a job in Jiangsu at China Construction Bank. But obviously Chen’s father, who lives in a simple village, can’t provide similar assistance.

“There’s nothing to envy,” Chen said. “Destiny is controlled by our own hands.”

When he’s applying for jobs, Chen tries to choose those that require real skills and don’t rely on nepotism; like sales positions. Chen figures that even if others have guanxi (connections), they won’t go for jobs with heavy sales performance pressure.

Finally, Chen found a job with Beijing New Building Material (Group) Co., Ltd., an A-share listed company subordinate to a state-owned enterprise. The pay is about 40,000 yuan annually plus sales commission. Chen is very satisfied with the offer and is optimistic about the company’s promotion mechanism.

Is Guanxi a Skill?

Su Fan, who works for a state-owned bank in Guangzhou, has been assigned some special “interns” to work for her over the past four years. These interns have included the daughter of a public security bureau head in Xiangtan and the son of a government agency head in Zhuhai. “I wouldn't dare make them work overtime,” Su said. “If they did something wrong, I didn’t dare say anything about it.”

Su points out that the fathers of the Post-90s generation were born in the 1960s. And when those born in the 1960s came of age in the late 1970s, they ran into many great opportunities - like the reopening of the Gaokao college entrance exam and Reform & Opening Up. Those who seized the opportunities have now become society’s elite. “This means those born in the 1960s who are doing well can provide more opportunities for their children,” Su said. “On the contrary, for those born in the 1960s who aren’t doing well, their children have difficulty competing with others.”

Su got her job at the bank through open recruitment in 2007. She’s noticed that since then, people have rarely been hired this way.

University students’ employment hopes seem to be going back “within the system.” Data from ChinaHR.com showed that a year ago, 21 of the 50 employers that university students said they were most satisfied with were foreign companies. But this year, only 3 were foreign, with most of the rest being state-owned enterprises.

Young people whose parents are officials are often called guan er’dai, or “second generation officials.” When Zhao Qi, the student who will study in Hong Kong, heard people calling him this, he said, “It’s not like that,” and then after a short pause, “it’s not like my parents are ministerial-level officials or anything.”

Zhao admitted though that his parents have provided him with broader opportunities and a smoother path to success. After he finishes his study in Hong Kong, he plans to let his parents arrange a job for him in a state-owned enterprise. “Compared to places like foreign companies that rely purely on ability, I have more advantages,” he said.

Zhao says that personal effort is the most important thing while in school, but when you go out into the real society, guanxi is more important than anything. He also says it’s reasonable to get help from parents. “I have these resources, so why not use them?” he says. “Resources also reflect one’s ability.”

Tang Jun from the Social Policy Research Center disagrees. “Guanxi cannot be regarded as personal ability,” he said. “Young foreigners aren’t willing to do this, even if their parents have money, they don’t want to rely on their family.”

“Guanxi is social unfairness,” he added.

A report on China’s social mobility released by the Chinese Academy of Social Sciences in 2004 found that children of cadres were 2.1 times more likely to become cadres themselves than those whose parents weren’t officials. And a 2012 Tsinghua University survey showed that the starting salary for university graduates with officials for parents was 13 percent (about 280 yuan per month) higher than those whose parents weren’t officials.

Returning to “Inside the System”

Every year there are many fresh graduates like Chen Ming who have no guanxi but still want to get “inside the system”. However, their route tends to involve starting at entry level positions, working tirelessly and tolerating inferior treatment compared to those who inherited their position “inside the system.”

Zhou Boyu graduated four years earlier than Chen and also comes from Sichuan. He worked for a company under China National Petroleum Corporation for two years, but wasn’t ever able to become a formal employee. He resigned his job in anger and proceeded to write a long novel criticizing nepotism within the system. His novel was only circulated among his classmates, and in the end, he went to work for the district government of his hometown, thanks to the help of contacts his family had.

Chen Zhiwu, an economics professor at Yale University, says that in societies with a high proportion of the economy controlled by state-owned interests, there’s a wider wealth gap and more severe social unfairness. That’s because such a society relies more on power and connections to allocate resources.

“This is the source of our struggles and pains,” said Zhou Boyu. “If you don’t get ‘within the system’ through guanxi, then you’ll live a very bad life. But if you do enter the system you’ll find a serious conflict of values.”

Tang Jun says that in the 1990s, especially in Guangzhou, leaving a secure job in order to do business was a good choice. “Now that people see the economy slowing, the advantage of private enterprises has gradually become smaller,” he says. “The salary isn’t much higher than that of civil servants, and the job isn’t stable.”

Wang Qiu, who was born in the 1980s, said that while she was at university she always looked down on those who took the civil service exam. She had been determined to become a lawyer since she was a child and after graduating from law school she managed to become an assistant at a big law firm. However, the long working hours and low pay killed her enthusiasm. Two years later, she decided to take the civil service exam.

At a class reunion, she joked with her former classmates saying that she never thought she’d make this move. Unexpectedly, many of them had the same feeling. One of her classmates had chosen to work as a civil servant in a prison in Yibin, Sichuan rather than work for a private company in the provincial capital of Chengdu.

This year the MyCOS research institute released its 2013 employment blue book. It reported that for those who graduated from university in 2009, the work units with the highest degree of employment satisfaction were government agencies and scientific research institutions.

Fang Xiaoya was born in 1984 and now works in the human resources department of a privately-owned education institution in Guangzhou. Lately she’s gone to several cities to recruit, but has only received a few CVs. In the beginning, she didn’t understand why. “Shouldn’t Guangzhou be a popular coastal city that many people yearn for?” she wondered.

Later though, several parents of graduating seniors called her to ask if Guangzhou’s home prices were high and if the company would help subsidize the purchase of a house. Fang came to realize that the importance of a house was greater than the work itself.

The Adventurous

Wang Hongting graduated from the architecture department of South China University of Technology and rejected an offer from a state-owned enterprise. He chose instead to work at a private real estate company since the boss valued him and there was more room for promotion and development. “Perhaps the income of officials comes more quickly, but it doesn’t suit my personality and lifestyle,” Wang said.

The father of Li Yijie, a third year student at Beijing University of Posts and Telecommunications (BUPT), works at an oilfield in Dongying, Shandong Province. The oilfield offers a favorable hiring policy for children of employees, so many of Li’s old Dongying classmates chose to study at China University of Petroleum so they could be assigned good jobs after graduation. Li’s parents wanted her to go this route, but she refused. “I don’t want to go back to my hometown,” Li said. “I want to leave this place and see the world.”

Li chose to study information engineering at BUPT. Most of her department’s graduates have gone to work for China Mobile, China Telecom or China Unicom. But Li chose an unusual path. She fell in love with internet entrepreneurship and started a small website with a few classmates. It was later unexpectedly bought by an e-commerce company in Beijing. Now Li is developing products in a new company while she finishes her studies. “My parents now support me very much,” she said. “They think I’m very brave.”

Li plans to stay in Beijing after she graduates since it has a good environment for starting an online business. With her qualifications, it wouldn’t be hard to get a job for a well-known internet company like Baidu, but she has more of an inclination toward entrepreneurship. “In a newly-founded company you can do everything,” she said. “It forces you to learn. One can grow rapidly.I like this kind of situation.”

Her colleague Wang Dong has the same idea. He just graduated from BUPT and gave up a job offer from Baidu for 200,000 yuan per year so he could go to the company where Li works. He says the most important reason is that he’d be no more than a cog at Baidu, whereas at a newly founded business, he can create important technology and seriously impact the company’s development.

(At the interviewees’ request, Chen Ming, Su Fan, Zhao Qi, Wang Hongting and Wang Qiu are pseudonyms.)

University majors such as animation, law, biology, mathematics, physical education and English have been listed as the "red-card" majors - fields in which supply exceeded demand for employment in 2012, according to a report.

Graduates with these majors were found to have low incomes and a high unemployment rate. These majors made the "red-card" list each year from 2011 to 2013, according to the 2013 Chinese College Graduates' Employment Annual Report released by MyCOS, an education consulting and research institute in Beijing.

"Many parents and students taking college entrance exams know little about college majors, and they might be making blind decisions in choosing 'well-known' majors from TV serials," said Wang Boqing, who worked on the report, at a press conference.

"Also, these majors are easily set up, so that almost all Chinese colleges have them and recruit a large number of students each year. However, most of the programs are weak in quality," he said.

Wu Zhongjiang, vice-president of Nanjing Institute of Technology, agreed with Wang. "Too many colleges offer these majors and recruit too many students, but these students usually cannot meet the high demands of the market after they graduate.

"Another problem is that market demand is changing all the time, but recruitment and student cultivation lags behind and cannot catch up with the change," said Wu, who also attended the conference.

"The release of the red-card majors is a warning to parents, students and colleges that students should stop blindly flocking to these majors and colleges should consider bettering their programs or changing their curricula altogether," he added.

Besides "red-card" majors, there are also "green-card" majors, ones for which market demand is increasing and the rate of employment and incomes are correspondingly higher. These include geological engineering, oceanographic engineering, petroleum engineering and mining engineering.

However, graduates are reluctant to pursue jobs in these fields because of the harsh working conditions.

Under such circumstances, changing the attitude of college graduates is really important, said Hu Ruiwen, the former president of Shanghai Education Scientific Research Institute.

"With 10 times more students, college is no longer a place to train senior talent and elites," he said. "Parents and students should learn to lower their expectations and find suitable positions for college graduates."

The report is based on a questionnaire of 529,000 2012 college graduates from 972 majors in 31 provinces, autonomous regions and municipalities on the Chinese mainland. It is the fifth time the consulting institute has released the annual report.

According to the report, from October to April the proportion of graduates signing a contract for a job was 35 percent, 12 percentage points lower than the same period last year. The contract-signing process in 2013 is slower than that of 2012, indicating that the employment situation for graduates is tougher this year.

A record number of graduates will come out of China’s colleges and universities this year, but many will rue the timing of their entry onto the job market as recruitment is slowing nationally, reports news agency UPI Asia.

At 6.99m, the number of grads is up 2.8% from 2012, but UPI says that the number of jobs for new hires has decreased around 15% year-on-year. However, China continues to recruit strongly at managerial and professional level.

One problem noted is that many new graduates prefer to work in the civil services, public institutions or state-run companies, rather than in smaller and medium-sized companies, with such firms reporting difficulties attracting these grads.

There is a parallel between this and the UK, where a recent survey of British university graduates selected the NHS as graduate employer of choice, with the BBC, the Civil Service and the United Nations also featuring in the top 10.

Click for more on logistics talent shortfalls in China. - See more at: http://www.recruiter.co.uk/news/2013/06/scant-jobs-for-record-number-of-chinese-graduates/#sthash.hXoHxk1U.dpuf

Having sent out more than 110 job applications but getting no more than 10 interviews, chemistry graduate Yi Feng gave up on the idea of landing a decent job. He had traveled around a number of major Chinese cities trying his luck for four months.

Yi, who graduates from Jiangxi Normal University in east China's Jiangxi province this month, decided to join the army to avoid what seems to be the country's most toughest job market in a decade. He will wait for more opportunities to become available in two or three years time.

The 22-year-old said serving in the army is very appealing, adding he will get a fair allowance and enjoy favorable policies when pursuing a graduate degree or a post in the civil service later on.

"Joining the army is not a bad option for me. It has relieved my stress to find a job and will probably make me more competitive," he said.

Although the job market in China is still much better than many other parts of the world, it is a tough market for graduates. Many job seekers have decided to shy away from the rat race and try other options.

A record-high 6.99 million Chinese students are leaving universities in 2013, a 2.8 percent increase year on year, to hunt for jobs at a time when employers are cutting down on recruitment, according to government figures.

The number of jobs for new hires this year has dropped about 15 percent year on year amid slowing economic growth in China, according to a Ministry of Education survey carried out among nearly 500 firms in February.

"The shrinking job market is the result of the sluggish world economy and tempered domestic growth," said Yang Lin, director of the career guidance center of Beijing Technology and Business University.

New posts in many large state-owned enterprises have declined dramatically this year after economic reform or restructuring was performed in order to achieve efficiency, Yang added.

Out of 178,000 college graduates in Shanghai, 44.5 percent had signed up for employment as of May 10, while the figure for Beijing was only 33.6 percent at the beginning of May, according to government figures.

The grave employment situation has concerned China's leadership. Chinese President Xi Jinping talked with college graduate representatives during his visit to a vocational training center in Tianjin in May, urging efforts to help graduates find employment.

China's central government outlined measures to help college graduates in their job search, including the implementation of existing policies favorable to graduates' employment, providing training subsidies, petty loans and tax breaks for self-employment.

Despite of the great pressure in the job market, many small- and medium-sized businesses are facing difficulties in finding employees due to a preference to seek work in the civil service, public institutions or state-run companies among young job seekers.

"We're keen to hire college students with an education background in marketing, advertising or human resources, but it's really difficult to attract them," said Wang Zhong, manager of a small private company based in eastern China's Shandong Province.

"It's my first choice to seek employment in a large state-owned enterprise or foreign company, because they usually have a better promotion system and motivation mechanism," said college graduate Gao Xinwei, adding it might be better to work at small firms after gaining enough experience at larger companies.

It is common for many young graduates to want to get their dream job straight away, but career planning is a long-term process and needs constant adjustment and improvement, said Yang Lin, adding that young people should not shy away from working at grassroots level.

"College students should have appropriate self-examination and be ambitious as well as down-to-earth in their job search," said Zhang Libin, with the Ministry of Human Resources and Social Security.

Chinese workers keeping an American executive confined to his Beijing medical supply factory said Tuesday that they had not been paid in two months in a compensation dispute that highlights tensions in China’s labour market.

The executive, Chip Starnes of Specialty Medical Supplies, denied the workers’ allegations of two months of unpaid wages, as he endured a fifth day of captivity at the plant in the capital’s northeastern suburbs, peering out from behind the bars of his office window.

About 100 workers are demanding back pay and severance packages identical to those offered 30 workers being laid off from the Coral Springs, Fla.-based company’s plastics division. The demands followed rumours that the entire plant was being closed, despite Starnes’ assertion that the company doesn’t plan to fire the others.

The dispute highlights general tensions in China’s labour market as bosses worry about rising wages and workers are on edge about the impact of slowing growth on the future of their jobs.

Inside one of the plant’s buildings, about 30 mostly women hung around, their arms crossed. One worker, Gao Ping, told reporters inside an administrative office in the plant that she wanted to quit because she hadn’t been paid for two months.

Dressed in blue overalls and sitting down at a desk, Gao said her division – which makes alcohol prep pads, used for cleaning skin before injections – had not been doing well and that she wanted her salary and compensation.

Workers in other divisions who saw how badly her division was doing thought the whole company was faring poorly and also wanted to quit and get compensation, said Gao, who had been working for the company for six years.

Starnes, 42, denied that they were owed unpaid salary.

“They are demanding full severance pay, but they still have a job. That’s the problem,” he said, still in the clothes he wore when he went to work Friday morning.

Chu Lixiang, a local union official representing the workers in talks with Starnes, said the workers were demanding the portion of their salaries yet to be paid and a “reasonable” level of compensation before leaving their jobs. Neither gave details on the amounts demanded.

Chu said workers believed the plant was closing and that Starnes would run away without paying severance. Starnes’ attorney arrived Tuesday afternoon. Chu later told reporters that there would be no negotiations for the rest of the day.

Starnes said that since Saturday morning, about 80 workers had been blocking every exit around the clock and depriving him of sleep by shining bright lights and banging on windows of his office.

The standoff points to long-ingrained habits among Chinese workers who are sometimes left unprotected when factories close without severance or wages owed. Such incidents have been rarer as labour protections improve, although disputes still occur and local governments have at times barred foreign executives from leaving until they are resolved.

Starnes said the company had gradually been winding down its plastics division, planning to move it to Mumbai, India. He arrived in Beijing a week ago to lay off the last 30 people. Some had been working there for up to nine years, so their compensation packages were “pretty nice,” he said. Then workers in other divisions started demanding similar severance packages on Friday, he said.

Kevin Jones, who advises U.S. companies on Chinese labour and employment law, said it is better if American executives stay at home and let their local managers lay off workers.

In a case last week, Jones said the chief financial officer of a U.S. telecommunications equipment maker wanted to come to Beijing to explain the situation and give 41 white-collar workers their termination notices.

“We told him to stay in America,” said Jones, who chairs the Shanghai-based Faegre Baker Daniels labour and employment practice. The company’s lawyers met with six employee representatives in a hotel. “We had two bodyguards but that was just in case things got out of control,” Jones said.

Christian Murck, president of the American Chamber of Commerce in China, said Chinese labour law specified a minimum severance pay in the event of a layoff due to economic necessity or if someone is dismissed due to cause, but not a maximum one.

“There is a kind of structural weakness in the way the labour law is set up that leads to negotiations and disputes when departures occur,” Murck said.

Beijing college graduates expect a monthly salary of 3,684 yuan ($600) as they hunt for jobs, which is around 1,000 yuan less than graduates in 2012 expected, the Beijing News reported Thursday.

The Beijing Youth Stress Management Service Center said that based on its analysis of its survey of 16,000 graduates and 1,015 valid questionnaires, the average monthly salary expectation has decreased to the lowest level in three years, 2,000 yuan less than expectations in 2011, the report said.

PhD students expect the highest salary, at 6,000 yuan, 1,160 yuan less than 2011's expectation.