For staff who have been working in the company for 10 years or more, they can apply for unpaid leave for up to two years to form their new business, according to the document.
China’s civil service in high demand as record 2.83 million apply for exam
China’s civil service in high demand as record 2.83 million apply for exam
Staff confirmed the existence of the document, but said the decision was not official as the company was still soliciting suggestions from employees, according to Chinese media reports.
The move was widely perceived on Chinese social media as disguising lay-offs – as the state sector usually faces stricter restrictions on direct job cuts – triggering further concerns over China’s job market, government finances and economic prospects.
China’s local governments, many debt-ridden, have been struggling due to subdued tax revenues and dwindling land sales.
And appeals for public sector employees to become entrepreneurs are not without precedent.
In November, government officials in Shaanxi province encouraged technical workers and researchers at universities and public research institutions to leave their jobs to start their own businesses, or at least on a part-time basis.
In October, Jiangsu province issued a notice vowing to promote entrepreneurship and support 200,000 people each year until the end of 2025 to set up new businesses.
Can China’s civil service still put bread on the table as iron rice bowl cracks?
Can China’s civil service still put bread on the table as iron rice bowl cracks?
In particular, for professional and technical employees at public institutions, they could apply for unpaid leave for up to three years without affecting their social security benefits and future promotion prospects.
A state-owned construction company in the Guangxi Zhuang autonomous region also encouraged its employees in September to start their own companies or seek other careers to reduce its labour costs.
The moves are reminiscent of the massive lay-offs seen during Beijing’s state sector reforms in the 1990s, when control over large state-owned enterprises was consolidated and small firms were abandoned.
Tens of millions of workers lost their factory jobs, with many becoming successful entrepreneurs as China’s economy soared, especially following its accession to the World Trade Organization in 2002.
But two decades later, business start-ups are facing much higher risks amid fiercer competition in a slowing economy.
“If I go to work instead of doing business start-ups, at least I can make sure that I do not lose money,” said former restauranter Victor Zhu, who closed his businesses after six years in the northeastern Liaoning province two months ago, and returned to his career as an electrical engineer.
After Beijing lifted its strict coronavirus control measures in the early months of 2023, a large number of new investors – some having been laid off and many expecting a release of pent-up consumer demand – flocked into the food and drink industry, as it is considered a sector with a lower entry threshold, Zhu said.
The economy has not recovered yet, people really don’t have much money to dine out
On Chinese social media, the unlucky entrepreneurs were labelled so-called start-up refugees.
From January to November last year, 3.808 million new restaurants were registered across China, increasing by 21.6 per cent year on year, according to data from corporate data provider Qichacha.
During the same period, 1.202 million restaurants were deregistered, or shutdown, representing more than double from a year earlier, the data showed.
“Why did we close our business? That’s just because we could not make ends meet, and there was no point in doing this any more,” Zhu said.
“The economy has not recovered yet, people really don’t have much money to dine out.”
