A recent video released on Al Jazeera’s English website explains that there is an increase in Chinese desire for precious gems and diamonds, since their steadily rising value could provide more security in the event of an economic downturn. Moreover, half of the skyscrapers under construction worldwide are in China, and analysts believe this is significant. Unfortunately, they claim, it is significant in a pejorative sense.
During New York’s Wall Street crash of 1929 and Dubai’s 2008 financial collapse, a similar pattern was noted. The boastful race to the swift which entails building vacant high-rise apartments and offices has become a sure indicator of impending economic troubles.
Let us not take Al Jazeera’s prediction at face value. Rather, we should ask ourselves the question: is the current economic situation in East Asia demonstrating signs that this is indeed the case?
The short answer is: no, it is not. Not in the immediate future, at least.
Since last year, the unemployment rate in China has remained steady at 4.1%, decreased 0.1% in Hong Kong to 3.2%, stayed level in Taiwan at 4.18%, risen 0.1% in Japan to 4.6%, and soared to a two year high in South Korea to 3.7%. Nonetheless, compared to the United States or many European countries, these figures are not bad: the U.S. currently stands at 8.3% unemployed, the UK at 8.4% and Spain is at 22.85%, the second highest in Europe after Macedonia.
However, these figures should not be interpreted too literally. The job market in countries like Japan and South Korea is stratified into three layers. One is the permanent job posting in large corporations and conglomerates, such as Toyota, Samsung or Sony. The second one is the posting in smaller businesses. The third are the jobs that larger corporations normally outsource – oftentimes to China. Most graduates (both locals and foreigners) usually compete to become members in the Tier-1 jobs in large companies – an arduous and competitive process known as “shukatsu” in Japanese.
Those who cannot get a Tier-1 job may choose to either do a part-time “arbeit“ or become a so-called “parasite single” - jobless and single 20-30 year olds who live with their parents. They do not fit the definition of “unemployed,” as they are either part-timers, or do not aspire to find a job in the short term. Since these people number in the tens of millions, they are enough to considerably skew the aforementioned statistics. Unemployment is a complex phenomenon and difficult to accurately chart. It is nonetheless safe to say that these figures are currently much lower in East Asia than in the West, despite these smaller facets and intricacies.
In November 2010, the New York Times ran an article that underlined analysts' concern over the tremendous employment imbalance between East and West, as well as “inflation and overheating economies.” An imbalance could bring down one country, and that would have an undesirable ripple effect in other countries. Despite these problems, it mentions that the demand for individuals “with the desired cultural background, language skills and other qualifications” in the Asia-Pacific region is insatiable. It concluded, “there’s no better place to be looking for a job than in Asia.” Although printed in 2010, the point is not outdated.
One major problem for East Asian locals is that, in order to gain that “desired cultural background, language skills and other qualifications,” one must often take a gap year or two to focus on those aspects which may have been put aside during one’s high-school, university or graduate days. Unfortunately, the medieval mindset that afflicts corporate culture in countries such as Japan and South Korea makes it so that job-seekers who have taken a gap year must account for it in their CV – they must explain their reason for deviating from the tightly scheduled lifeline imposed by their own culture. Stepping out of line is entirely out of the question. This is a cultural construct that is slowly changing, and must change in order for the country’s workforce to be better prepared for a multicultural, global economy.
A 2012 poll by Robert Walters Asia Job Index explains job sectors in expansion and decline. Robert Walters is a company that tracks advertisement volumes for professional positions across the leading job boards and national newspapers throughout Asia. Their findings show that there has been a 10% fall in job advertisements from October to December in all the countries it surveyed. It explains, “global economic uncertainty has had an impact on candidate and client confidence across all regions,” and points out that the calamitous floods in Thailand negatively affected hiring levels in countries such as Japan, which has also seen conservative spending attitudes given the high value of the Yen. In South Korea, foreign investors’ concerns over North Korea’s political instability is set to affect the market. Hong Kong is slowly recovering from the global economic slump, as inflation has stabilized and unemployment is one of the lowest in East Asia.
The report explains that the Asian market has indeed been affected by the Eurozone crisis, particularly within the financial services sector. Nevertheless, the outlook for 2012 is “generally upbeat.”
According to Robert Walters, the largest drops in Hong Kong’s advertised jobs occurred in the Human Resources/Training sector, as well as the Editor/Reporter sector. Japan saw significant increases in Property Management jobs, Operations (Product, Logistics) and Medical Service, but considerably dropped in the Merchandising/Purchasing sector. China’s figures remained relatively steady, but saw a surge in demand for IT Supervisor/Manager/Programmer/Database Administrator positions; its biggest percentage decrease was in Advertising/Marketing. South Korea’s average number of advertised jobs was the only one out of the surveyed countries to see a +2.3% increase from a year earlier, a reassuring indicator that the country’s economy is indeed expanding. Demand for Editor/Reporter jobs, as well as IT and Customer Service/Account Servicing jobs have all increased considerably.
But as aforementioned, in today’s interconnected global economy, one country’s downfall could cause a domino effect of disasters. With this in mind, Al Jazeera’s prediction does not seem so unrealistic after all.
In an analysis by three economists, David Autor, David Dorn and Gordon Hanson, an interesting observation was made. From 1990 to 2007, regions that were exposed to competition from Chinese imports saw lower wages, higher unemployment and a lower labor force participation. Chinese imports have already severely affected manufacturing in the U.S. and other countries. Crippling the U.S. economy by stifling the manufacturing industry can and probably will lead to dire consequences even for East Asia.
Wary of this dilemma, China has lowered its GDP growth target in 2012 to a seven-year low of 7.5%, in the hope that inflation will not rise. To do this, Chinese authorities plan to stimulate domestic consumption, instead of fixed capital investment, which has long been the driving force of its economy. This should result, at least in part, to a lower GDP. Furthermore, China, like Hong Kong, Japan and neighboring South Korea, all face a severe aging population problem. Whereas longer life expectancy is generally a good thing, supporting the elderly will place a huge financial strain on the government as well as the younger generation of taxpayers. It will also cause the workforce itself to shrink. To solve this problem, the politicians must loosen their stringent policies and control on immigration by letting more foreigners (particularly south-east Asians) into their borders. This will allow the respective countries to have a broader workforce, as well as more babies - balancing out the young to old ratio.
However, in recent years East Asian countries are seeming less prone to accept foreigners into the workplace and are favoring locals more and more. An article on the Economist explains that expats looking for jobs in Asia used to be called “FILTH – ‘failed in London, trying Hong Kong.’ Now though, they may end up as FISHTAILs – ‘failed in Shanghai, trying again in London.’ This is because employers in Asia, despite strong demand for managers and professionals, increasingly choose to hire locals, not outsiders.” What is occurring is a strategy reversal, wherein governments are tightening visa rules instead of relaxing them, and employers are progressively giving priority to their nationals to lower unemployment levels in their country.
The locals-first mentality that is starting to take hold in East Asia is good for corporations and for the nation in question, but the population problems it entails may be detrimental in the long run. What’s more: just as biodiversity is healthy for a balanced ecosystem, cultural diversity is important for any society’s wellbeing. Stimulating immigration is not necessarily a bad thing.
Although skyscrapers are being built at an astounding rate in China, for now, East Asia is still a good choice for job-seekers because there is risk as well as incredible opportunity. If one takes a close look at the Chinese characters for “crisis,” one can see that the first character means “risk,” and the second, “chance.” What must be relentlessly sought and seized is that glimmer of chance.