China has entered an era of “universal pay cuts”. As civil servants’ salaries are being cut, many places have also recently seen the incomes of retired teachers, doctors and other public institution employees plummet due to reductions in government subsidies.
Civil servants’ pay cuts of at least 20%
After the pandemic, many local governments in China have faced fiscal issues and news of pay cuts for civil servants has emerged. Hong Kong media reported that some areas of Guangdong have started delaying subsidy payouts, and Beijing and Tianjin civil service systems have also clearly laid out plans for pay cuts. Some civil servants in Zhejiang have seen salaries slashed by as much as 20%.
The Hong Kong Sing Tao Daily website today cited a civil servant in his 50s from a city in Zhejiang named Lin Shun (alias) saying “My income will be reduced by 30,000 to 40,000 yuan (RMB) this year. Since I’m close to retirement it’s fine, but it’s tough for younger people.”
Lin Shun said that his unit suddenly announced a pay cut mid-year, and other subordinate units across the city faced similar circumstances. “Some districts had cuts of 10%, some even reached 20%. Leading cadres will see larger reductions compared to younger people.”
The report said that earlier there was news indicating that department head-level civil servants in Shanghai had their annual salaries reduced from 350,000 yuan to 200,000 yuan, while section chief-level annual salaries were cut from 240,000 yuan to 150,000 yuan, a reduction of over 40%. In addition, some areas of Guangdong have started delaying civil servant subsidy payouts, and the Beijing and Tianjin civil service systems have also clearly laid out plans for pay cuts.
Lin Shun told reporters that many of the pay cuts in his region were done through “covert” means. For example, performance evaluation requirements from higher level departments for subordinate units suddenly became much stricter this year, making it hard for people to meet them, leading to automatic decreases in year-end bonuses. Internally created incentive subsidies and various nominal bonuses in units were also uniformly canceled by higher level departments under the guise of “standardization”. Lin Shun analyzed, “The reason for the pay cuts is still largely unrelated to the overall economic recovery after the pandemic, but more so that the market in the industry has not fundamentally improved, impacting government fiscal revenue.”
However, with the unemployment crisis, fresh graduates still scramble for “iron rice bowl” civil service jobs. Lin Shun revealed that the level of his unit is not high, but the recruitment requirements for positions demand at least a master’s degree, “We open 1-2 positions every year, but only those with master’s degrees can apply, the admission ratio is probably a few dozen to one.”
Data from China’s Ministry of Finance shows January to August local government bond issuance totaled 6.3 trillion RMB, hitting a new historical high. As of November last year, outstanding local government debt was 35 trillion RMB; outstanding central government debt accumulated to 23.3 trillion RMB, totaling 78 trillion RMB. In addition, local governments’ land sale revenues plunged sharply. Local finances relying on land sale income found it hard to balance budgets, and civil servant salaries and operating costs of public institutions relying on fiscal spending encountered unprecedented difficulties.
Public institution employees also facing pay and bonus cuts
In addition to civil servants, pay cuts and cancellation of benefits for public institution employees have been reported across China. According to Chinese mainland media reports, doctors at Beijing Tongren Hospital reflected that their August salaries were significantly reduced, with performance bonuses and night shift pay being cut by 50%. The doctors promptly appealed to the hospital, attracting high level attention across society. The reports cited a doctor from Beijing Tongren Hospital saying the pay cut happened suddenly, with departments and doctors only being notified the day before payday. Many medical staff and relevant experts analyzed that hospitals’ losses in recent years are the main reason for doctors’ pay cuts. In addition, increased workload due to epidemic prevention and other factors has led grassroots hospitals to spend more on purchasing daily epidemic prevention supplies and consumables.
Many Chinese netizens have been heatedly discussing on social media the trend of pay cuts for doctors, teachers, journalists and police officers, calling it China’s entry into an “era of universal pay cuts”. Some say: “Beijing Tongren Hospital is one of China’s top ophthalmology hospitals, if even they are like this, what about other hospitals? In the past two years, there have been continuous reports of hospitals cutting pay, some even unable to pay salaries. This June, news came out about doctor pay cuts in Luoyang, Henan and Guangxi. Tan Qiang, a top thoracic surgeon at a Shanghai hospital, said he earns less than 500 yuan per surgery on average, even less than a decent barber on the Shanghai Bund.”
Another Shanghai resident said: “One of my clients is a doctor at a Shanghai hospital (Ruijin Hospital), he said many Shanghai hospitals have collectively cut pay, he didn’t give details on the extent, but doctors’ work really is grueling. What we should reduce are doctors’ illegal incomes, not salaries and bonuses.”
In Guangzhou, a resident revealed that his mother is a retired teacher from a top university in Guangzhou, with a pension of close to 8,000 yuan. The school’s retiree office notified all retired teachers last week to return to school and sign a new “Teacher Retirement Payment Standards”, and pensions for already retired teachers were cut by almost 50%. His mother’s pension dropped from 8,000 yuan to 4,500 yuan. The highest pension of 9,000 yuan was cut to 5,000 yuan. Taking effect October 1.
Additionally, there are online reports that Yangzhou, Jiangsu has required public servants to refund their 2021 basic performance bonuses, to be completed by the end of March next year. The notice shows that on September 18, member units of the Yangzhou Allowances Joint Conference held a meeting, conveying a notice from the Jiangsu Provincial Finance Bureau, requiring all counties and districts to complete the refund of the 2021 basic performance bonuses by the end of March 2024.
Ms. Xu, a public institution employee who declined to be named due to personal safety concerns, told Radio Free Asia on September 29: “The 2021 performance bonuses were paid out in early 2022, now in 2023 they are asking to refund the 2021 money (performance bonuses). It will be deducted when paying out performance bonuses at the end of this year.”
The notice stated that for current employees, each unit should calculate the refund amount, and deduct the monthly average of the 2021 basic performance bonus from the current month’s salary for 6 consecutive months, or it can also be deducted in one lump sum of 6 months of performance bonuses. For those who retired or transferred out in 2021 and thereafter (who have received part or all of the 2021 basic performance bonus), each unit should organize and complete the refund within the prescribed time.
Tianjin retired teacher Ms. Yan revealed that based on her understanding, police in places like Tianjin, Nanjing and Dalian have had their salaries cut by 20%: “This only appeared after the pandemic, requiring civil servants to take pay cuts, return bonuses etc is happening more frequently, it didn’t use to be like this before. The ‘iron rice bowls’ and ‘golden rice bowls’ that the common people saw are now starting to see pay cuts, this is not isolated to one place.”
Unemployed youth have no income
According to official statistics, China had 11.58 million college graduates this year, breaking historical records. Meanwhile, data released by China’s National Bureau of Statistics shows that the youth unemployment rate has continued breaking new highs and rising monthly, from 17.3% in January to 18.1%, 19.6%, 20.4%, 20.8% and 21.3% in the following months. After repeatedly hitting new highs, official youth unemployment data is no longer released.
A Beijing youth commented online, “Out of 10 friends, 7 are unemployed.”
On September 15, China’s National Bureau of Statistics released August economic data, but the youth unemployment rate that the outside world cares most about remains a mystery. NBS spokesperson Fu Linghui said, “From our surveys this year and data from some departments, youth employment in August clearly improved, showing the effects of employment policies, especially youth employment policies, gradually emerging.”
After Chinese officials stopped releasing youth unemployment data, a new term “slow employment” emerged. A survey of 2,009 respondents jointly conducted by China Youth Daily Social Survey Center and Questionnaire Star recently showed 72.9% of respondents personally knew college students engaged in “slow employment”, while 62.4% felt it was because those graduates haven’t figured out their future plans yet.
The article interviewed Xia Qingyun, deputy researcher at the China Institute of Employment Research, who said “College students ‘slowly seeking employment’ is gradually being accepted and practiced, already becoming a new employment concept.”
Previously on August 15, China’s youth unemployment rate was not released. At the press conference, Fu Linghui said beginning this August, urban survey unemployment rates by age group such as youth nationwide will temporarily stop being published.
Fu Linghui explained this is mainly because as economic and social development continues evolving, statistical work needs constant improvement, and labor force survey statistics also need further enhancement and optimization.
Previously on July 17, Fu Linghui said at a press conference that looking at this year’s circumstances, the youth unemployment rate in June was 21.3%, increased from the previous month. Judging from the August situation, as college graduates and youth enter the job market in large numbers, it may increase further.
Based on Fu Linghui’s remarks, it appears that as China’s economy continues sliding, the job market is extremely tense, and the youth unemployment data is likely too ugly to publish, hence the halt in releases. On September 15, China’s youth unemployment rate still was not announced, and it may disappear forever.
Ren Zhongdao, researcher at overseas think tank Tianjun Political and Economic Institute, previously pointed out that China’s official statistics cover youth aged 16-24, including not only college graduates but many who entered the workforce after secondary education. For example, 17.02 million babies were born in 2001, there are 11.58 million college graduates in 2023, minus deaths, emigration and other factors, there are still millions needing employment. Especially the 20 million flexible employed that officials claim are not included in unemployment statistics.
In June, China’s official unemployment rate for youth aged 16-24 was 21.3%, the highest since this data has been tracked since 2018. It was also the last time China released an official youth unemployment rate.
Previously, Peking University professor Zhang Dandan wrote that China’s youth unemployment rate peaked at 46.5% in March this year, far higher than officially published numbers.
A Wall Street Journal report previously said that for investors and economists, the sudden stop in releasing relevant data reflects a worrying pattern of increasing opacity around key areas of China’s economy. They warned that Beijing authorities’ moves to restrict information flow could further dent already fragile confidence and undermine China’s appeal as an investment destination, even as Beijing stresses the importance of attracting foreign capital.
Shen Meng, director at Beijing-based investment bank Chanson & Co., said regardless of whether Chinese authorities publicize youth unemployment data, it would not change domestic views. He pointed out that not releasing the data will only intensify market concerns about the health of the Chinese economy.
A Bloomberg report said the halt in publishing youth unemployment data has become Beijing’s latest move to gradually limit sensitive information.