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Pink slips hit where it hurts the most

By Wang Ying (China Daily)
Updated: 2009-02-20 08:01

As the financial crisis spreads, more and more white-collar workers and some gold-collar workers are feeling the heat across all sectors. So much so that if you manage to retain your job, you are the toast of the town.

Job seekers at an employment fair in Shanghai. [Bloomberg News]

"Before the Chinese New Year, my colleagues started to gossip about news of staff cuts," said an office worker who wanted to be identified only as Coco. She works for a Swiss company in Shanghai. "Up to now, our company has axed about 10 percent of the staff, and many familiar faces disappeared after the Chinese lunar New Year holidays," she said.

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The 25-year old Zhu is one of the latest entrants to the jobless club. She used to work as a banking accountant for a foreign-funded real estate company in Shanghai. "My services were terminated in late December due to budget cuts," said Zhu, who got two months' salary as termination pay.

According to Zhu, their department started to lay off staff since the middle of December, and around 55 percent of the original staff lost their jobs in succession.

Lu Ming, professor, Fudan University, told China Daily that the country's heavy reliance on export, labor-intensive and capital-intensive industries would create a ripple-down effect. "Industries related to trading, finance and economics, IT, communications, banking, consultancies, media firms etc are all facing cost cuts or are downsizing," Lu added.

A white paper released in January by Shanghai Human Resources Consulting Association predicted that the first-half of 2009 would see negative growth in new positions at Shanghai's foreign companies and privately-owned firms.

The white paper, which elicited views from headhunters, legal experts, employers and employees, quoted a survey of 7,000 foreign companies in Shanghai that showed that 48 enterprises had already started feeling the effects of the crisis.

A total of 2,218 employees were laid off, or 0.79 percent of the entire staff. The report said the situation would not get any better until the second-half.

Chen Qingguang, a lawyer with Beijing-based Zhong Yin Law Firm in Shanghai office, said the number of employment dispute cases he received had jumped to 30 percent.

To protect the legal rights of employees, the Shanghai government had asked those enterprises which cut more than 20 jobs or more than 10 percent of the entire staff to file a report with the local trade union or notify all staff 30 days before the layoff. This requirement is also in keeping with State Council's recent guidelines.

"Such measures stress the importance of enterprises' social responsibilities, which are particularly valuable in the context of a crisis," said Lu.

"If the small-sized enterprises do not cut jobs and lower costs, they will be forced out of business sooner or later," Chen said.

"In response to the growing number of jobless, the Shanghai government can provide a better business environment, free credit controls, and reduce business costs," Lu said.

Nearly two months after losing her job, Zhu is still looking for job opportunities. "It's hard to find a job amid such a market slump. I've contacted some headhunters and they advised me not to limit my search to the real estate industry alone and also lower my salary expectations," she said.

"Enterprises are always in search of valuable talent, even during a financial crisis", said Freedom Zhu, marketing director, Randstad HR Solutions, a staffing services provider.

Lu cautioned not to classify all corporate behavior as layoffs in disguise. He cited the example of Intel's decision to integrate its Pudong R&D center, employing 2,000, into the Chengdu division.

"I don't see it as a layoff trick. For an IT company, to transfer its R&D center from Shanghai to Chengdu for lower costs is reasonable and understandable. It draws attention only because it happened during a financial crisis," he said.