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Global financial crisis spills over to China's labor market

(Xinhua)
Updated: 2008-11-02 08:58

In the space of a year, Yang Chanjuan's career plan has changed direction. As a soon-to-graduate college student in economics, Yang is feeling her fortunes being buffeted by the financial crisis.

Yang was recently told by her schoolmates already working in the financial sector that their companies would cut staff, or there would be no bonus this year. Amid the turmoil and full of uncertainty, a job in banking or securities company was no longer desirable to her. As a result, she decided to apply for a government job.

Yang's change in career plan came as the financial crisis is spreading around the world. As it is now beginning to hit the real economy, more and more people, not only those in banks, have lost their jobs.

International Labor Organization (ILO) estimated earlier that the financial crisis would cost 20 million jobs globally by the end of 2009. The ILO said the new projections could prove to be underestimates if the effects of the current economic turmoil are not quickly confronted and plans not laid for the looming recession.

Related readings:  Financial meltdown hurting Chinese farmers  Steel sector dives deep into red  Worst times over for China's insurance industry  Exporters save themselves in the financial downturn

In the birthplace of the crisis, the United States, big companies from Goldman Sachs to Coca Cola, Motorola to Alcoa, have all announced their job cut plans. Economists believed the jobless total could increase by 200,000.

Back to China, unemployment now becomes a concern too. Although with $2 trillion of foreign reserves, a budget surplus and a controlled capital market, China would suffer limited direct impact from the crisis. However, weakening demand from its major markets, North America and Europe, is now leading China's real economy in the export sectors into a tough situation.

In China's coastal areas, export enterprises are now struggling with soaring labor cost and fewer orders from foreign customers.

Many toy factories in South China's Guangdong Province were shut from January to July this year.

Earlier last month, two big factories of a Hong Kong listed toy maker were shut. As a result, 7,000 workers lost their jobs.

Affected by the global financial crisis, the company was suspended from trading thus it faced severe shortage of current funds.

Statistics from the Ministry of Commerce showed that China's export suffered a growth slowdown in the first three quarters compared with the same period last year -- from 27.1 percent to 22.3 percent. The government said the gross domestic product (GDP) growth rate in the first three quarters this year slowed to 9.9 percent - a 2.3 percentage points fall compared with the same period last year.

"The greatest impact is on these labor-intensive, small and medium-sized export enterprises," said Wang Dewen, a labor economist from China Academy of Social Sciences.

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