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China's Other Big Problem: 35 Applicants For One White Collar Job

Over a year ago, the world's most influential and central-banker spawning FDIC-backed hedge fund, Goldman Sachs, proudly revealed that despite 6 consecutive years of revelations of bank rigging, manipulation, fraud, bailout, crime and so on, there was no other job that the world's most ambitious young people wanted to do more:

As an investment bank, our main asset is our people and the advice and solutions that they provide to our clients. Great people build great relationships. And, we are fortunate to have a diverse group of young people from around the world who continue to view Goldman Sachs as a great place to begin and sustain their careers. For our latest analyst class, more than 43,000 candidates applied for 1,900 positions. We accepted about four percent of those applicants and of those receiving offers, more than 80 percent accepted.

Or, as Lloyd Blankfein would proudly calculate, 23 applicants for every job opening.

According to that logic, if working at Goldman is about as prestigious as it gets, then we know a job - based on unprecedented demand - that is even more prestigious: your average white-collar job in China, for which there were a record 35 application in the third quarter.

Indeed, in the world's most populous communist country where jobs used to be guaranteed - by definition - to anyone, in any walk of life, it has suddenly become next to impossible to progress up the career ladder, something which will result in great social angst and instability in the coming years.

According to China Daily, competition for white-collar jobs became fiercer in the third quarter, with more than 35 job seekers contending for the same position on average. This is a jump from 26 and 29 in the first and second quarters this year, a Chinese human resources website said on Tuesday.

The Daily cites Zhaopin.com's third-quarter jobs report for white-collar workers, which  showed that demand for talent was shrinking with the slowdown of China's economic growth. At the same time, more such workers were considering changing jobs, leading to more competition among job hunters, especially those in Northeast China and in second-tier cites.

In Zhaopin's competition index for major cities, Shenyang and Dalian, both in Liaoning province, and Changchun, Jilin province - all in Northeast China - ranked first, fourth and eighth.

Zhu Hongyan, chief career consultant for the website, said that "the changing economic structure affects certain traditional careers. The need for professionals in certain fields declined, and some even disappeared." Hongyan added that "Workers in these industries are forced to seek career opportunities in other ones, increasing competition in the market for job seekers."

 

Moreover, second-tier cities such as Chengdu, Sichuan province, Suzhou, Jiangsu province, Xi'an, Shaanxi province, and Tianjin are all among the top 10 cities with the most competitive job market.

 

Beijing ranked ninth, while Shanghai ranked 18th.

 

Zhu, the career consultant, said the trend of white collar workers shifting their jobs to fast-developing second-or third-tier cities has become more prominent because of the high pressures of working and living in larger cities, deteriorating environments and restrictions on cars and housing.

 

"Regional preferential policies have helped second-and third-tier cities attract overflow industries and companies from the overcrowded metropolises, which have their own restrictions such as limited land and other resources," Zhu said.

"However, second-and third-tier cities do not have the same mature economic structure and industries as the metropolises," added Zhu. "So not all job seekers can find satisfactory jobs."

And with 35 applicants for any one job, that is precisely what is happening.

Worse, due to surging labor market competition and the drop of vacant positions for which there is demands - usually at the best paid positions in the labor chain - wages are about to tumble as employers realize they can pay anything they want: after all if someone quits, there are 34 other workers happy to replace him.

This has two major impllcations:

  • first, with wages set to drop, yet another source of deflation is about to be unveiled;
  • second, as China's economic collapse leads to increasingly less job opening , it inevitably means that social tensions and violence are set to rise in a country which see the migration of tens of millions of people from the heartland to the coastal cities.

Finally, all those conflicting forecasts in 2011 that China may or may not hit wage parity with the US some time in 2016, well - we now know the answer: China may have reached its Lewis point, but now that the economy is on its way to a crash landing, it has solidly gone into reverse.

(for those asking what China's first problem is, well there are many to choose from, but if given just one option, we would repeat what we said last night when we reported that "CLSA Just Stumbled On The Neutron Bomb In China's Banking System" - the country's trillion in non-performing loans which nobody is talking about just yet).