(Yicai Global) May 23 -- The Covid-19 outbreaks in many of China’s economic hubs since March have hit private enterprises badly, with many saying that they are downsizing and letting staff go, according to a recent survey.

Private firms, which make up 92 percent of China’s business entities, and particularly those in the first-tier cities of Shanghai, Guangzhou, Shenzhen and Beijing, are experiencing a big drop in revenue yet still have high fixed expenditure such as labor costs, according to a poll conducted by online recruitment platform 51Job. Just over 40 percent of respondents said they are cutting departments and reducing their headcount this year.

Some 15.6 percent of companies polled are trying to revoke pay increases, 13 percent are reducing salaries and 10.6 percent are unable to pay their staff wages on time, according to the report ‘Observation of Trends About Private Companies’ Employment Relationships in 2022.’

Eighty percent of small-sized firms and 30 percent of medium-sized ones do not have enough cash flow to keep operating for more than three months, the report said.

Around 39 percent said they have set higher key performance indicators, 30.2 percent are asking staff to find ways to save on costs, while nearly 40 percent have said they will start using more freelancers. Some 15.9 percent said they have had to make major adjustments to their products and services and almost 10 percent said they are shifting their business focus to the smaller third- and fourth-tier cities.

There were about 44.6 million private firms in China last year, more than four times the amount in 2012, and they play an important role in stabilizing economic growth and boosting employment.

Editor: Kim Taylor