Year of the Dog heralds shrinking bonuses for Chinese workers
Financial professionals took the biggest hit in 2017 as year-end bonuses more than halved from a year ago
The Year of the Dog may be barking less cheer for China’s white collar workers, who have received their lowest year-end bonuses in three years – despite a nearly 7 per cent increase in the country’s GDP.
The average year-end bonus for mainland Chinese workers reached 7,278 yuan (US$1,147) in 2017, compared with 12,821 yuan in 2016 and 10,767 yuan in 2015, according to a report by hiring website Zhilian Zhaopin, China’s equivalent of LinkedIn.
In China, year-end bonuses are a key indicator of the quality of jobs. Many companies pay employees a month’s salary or more as an extra welfare benefit, which is not required under the Chinese labour law.
Year-end bonuses, along with an individual’s marital status, have become topics of conversation over Lunar New Year banquets in recent years, as many parents use them to gauge the success level of their children.
Daisy Xia, a 30-year-old advertising industry executive in a southwestern Chinese city, said she felt that her 2017 year-end bonus was “much lower” compared with when she started working in 2010.
“I feel that in general, the overall economic environment is getting worse,” she said.
Xia said she did not receive any “fat” red packet in 2016, and last year’s bonus was less than a month’s salary.
The world’s second largest economy after the US, China saw its GDP expand by 6.9 per cent in 2017, boosted by strong trade data and growth in the property sector. But to many of China’s ordinary workers like Xia, the fruits of the country’s economic development were not shared equally.
Xia said many of her friends who worked in sectors like banking also took a hit. One friend who works at a big bank told her that the institution had axed almost all its major businesses apart from the property segment. Another friend, an importer of fresh goods and raw milk whose major clients are local government departments, also saw her business shrink as the government tightened its spending.
Xia’s observation could explain in part why a role in the financial sector, once the most envied profession in China, is no longer the most sought-after job – sliding from the top spot in 2016 to No. 4 last year, based on year-end bonuses awarded.
The average year-end bonus for financial workers in 2017 was slashed by more than half to 7,720 yuan, compared with 17,241 yuan in 2016. Those who worked in the property sector shared similar woes, with their ranking dropping from No. 2 in 2016 to fifth spot, with an average bonus of 7,686 yuan in 2017. The findings were based on a poll of 23,136 respondents.
Experts say the trend was largely a result of China’s ongoing priority and push to contain financial risks, as President Xi Jinping tries to steer the economy through perilous territory, with a mountain of debt and an increasingly hostile US government.
China’s securities regulator has also been rejecting initial public offering applications at the fastest pace in four years since June last year, which reduced the volume of business for China’s bankers and brokerages. The deleveraging drive, analysts projected, is also expected to cut the number of property developers from tens of thousands to single-digit thousands or hundreds in the next five years.
Bucking the trend, however, is the internet and technology sector, which took second place in the rankings of the highest bonus paid in 2017. Workers in the sector earned an average year-end bonus of 8,801 yuan. The top spot was occupied by those working in the energy and mining sector with a year-end bonus of 9,865 yuan.
While the overall average year-end bonus shrank in 2017, the number of employees who received special welfare benefits increased significantly, according to Zhilian Zhaopin.
Sixty-six per cent of the workers polled by the recruitment website said they would receive year-end bonuses for 2017, up from around 39.5 per cent in 2016 and 13.4 per cent in 2015.
Meanwhile, British recruitment firm Hays found out that although there were fewer employers giving year-end bonuses in mainland China in 2017 compared with in Hong Kong and Singapore, in general the trend was in line with other Asian countries.
“Forty-six per cent of employers in China awarded major bonuses, which refers to more than 50 per cent of fixed salary in 2017. This was a slightly lower proportion of companies than in Hong Kong and Singapore but broadly in line with results across Asia,” said Simon Lance, the firm’s managing director of Greater China.