China’s youth left behind as jobs crisis escalates

Posters scream job opportunities at a job fair in Zhengzhou, central China. “Join us for the future!” soliciting an advertising position for graduates to sell electric vehicles. Others seek “courageous” candidates or “attractive women” to sell medical equipment.

But many jobs require 70 hours of work per week and pay less than Rmb3,000 ($400) per month. Wang, a commerce graduate, struggles to be upbeat.

Zhengzhou, the industrial capital of the province of about 100 million people and home to the world’s largest Apple iPhone factory, should be able to offer its graduates better career prospects, said Wang, who did not want his full name published.

The first member of his rural family to obtain a tertiary degree, he wondered whether he would ever be able to find a decent job, let alone buy a house. “At the moment, experience matters more than a university degree because there are so many graduates around,” he said.

As the world’s second-largest economy emerges from three years of COVID-19 restrictions, young unemployed graduates like Wang are bearing the brunt of a slow recovery. In May, 20.8 percent of young people aged 16 to 24 were unemployed, the largest proportion since the data series began in 2018 and higher than European countries such as France and Italy.

The Chinese economy is still creating millions of jobs, and the overall unemployment rate held steady at 5.2 percent in May. Yet many vacancies are in low-level work that is unattractive to university graduates. Beijing’s crackdown on the technology, finance and gaming sectors over the years has eroded what were once lucrative sources of employment.

An employability index for graduates compiled by the China Institute for Employment Research, a Beijing-based think-tank, has indicated an oversupply of labor for six consecutive quarters through the end of 2021. The situation could worsen with a record crop of 11.6%. University of MN graduates will enter the job market in June and July.

While the number of graduates may be small compared to the overall workforce, their plight is a sign of China’s slow economic recovery, which lost momentum in the second quarter as property markets and manufacturing struggled. “The Chinese economy is very weak at this stage, confidence is low, so I would say that’s the biggest factor in youth unemployment,” said Larry Hu, chief China economist at Macquarie.

Others said there are signs that the rise in youth unemployment is a structural issue that may eventually threaten political stability as well.

A report by the China Macroeconomy Forum think-tank, co-authored by prominent economist Liu Yuanchun, said, “We estimate that the problem of youth unemployment may continue for 10 years into the future and may worsen in the short term. ” “If it is handled improperly, it will lead to social issues outside the economic sphere and even become a trigger for political issues.”

President Xi Jinping, who himself was forced to work as a laborer in a rural village during the Cultural Revolution, has little sympathy for graduates reluctant to take low-wage jobs. He has constantly urged the youth Zizhao Kuchi – “Ask for difficulty”.

The government has recently launched a campaign to motivate graduates to “first find a job and then choose a career”. However, such messages only confirm what many young graduates suspect: despite spending for a degree at public universities, which can cost around Rmb30,000 a year – for a family of three Qualifications from all but the best have little value in the job market – about a fifth of the median household income for universities.

In Chengdu, a city known for its laid-back character and tech industries that typically attract young workers from across the country, a statue of a smiling panda bears the slogan “Hard work pays off”. Has happened.

Yang, an accounting graduate from a private second-tier university, has landed a job that pays only 3,000 Rmb a month, about a third of what his father earned as a construction worker.

He said, “My father has paid so much money for my education, he feels the investment is not worthwhile.” She said she couldn’t even imagine saving enough money to buy a house, get married or start a family.

The jobs crisis plaguing China’s graduates is all the more surprising given that this group is by far the most highly educated group in the country.

Economists said Covid restrictions are partly responsible for this. New jobs in the services sector probably waned last year, after adding 16 million jobs in 2018-19, according to Macquarie, as travel, restaurants and other businesses remained closed for three years.

Analysts said the private sector in general, which accounts for 80 percent of urban employment in China, still lacks post-Covid confidence. Private real estate investment, a measure of business activity, turned negative in May for the first time since 2020.

Government crackdown on high-growth sectors that have been big employers of young people, including ecommerce, education platforms, gaming and finance, hasn’t helped. Worried about technological competition with the US, Beijing is now pushing for advanced electronic hardware such as semiconductors. Macquarie’s Hu said in a report that youth unemployment has more than doubled since the government began “de-risking” it in 2018.

“Policy that focuses more on security and less on development also puts pressure on youth unemployment,” Hu said.

“There is a skills mismatch,” said Ishwar Prasad, senior fellow at the Brookings Institution. He said the government was trying to shift the economy to high-tech manufacturing, but the service sector was lagging behind and unable to provide enough jobs for graduates, while the high-tech sector was unable to absorb all the engineering students coming out. Wasn’t ready for. university.

You are viewing a snapshot of an interactive graphic. This is probably due to being offline or JavaScript is disabled in your browser.

Some argue that the underlying causes run even deeper. Michael Pettis, a senior fellow at the Carnegie China Center, said Beijing’s investment model ultimately focused on manufacturing and investment rather than the domestic consumption needed to create jobs.

“Sugar growth is not very labor-intensive,” Pettis said. Chinese policymakers tend to invest in infrastructure, manufacturing and property to drive growth. But the country’s investment to GDP ratio is already the highest in the history of a major economy, he said.

“When you build your manufacturing competitiveness on the basis of low wages, when low wages become a problem because of weak domestic demand, you’re kind of stuck,” Pettis said.

The youth are making every possible effort to improve their employment prospects. Until last year, Beijing’s Lama Temple was mainly visited by older people and prayed for good health. But on a recent hot Sunday, hundreds of unemployed youths were operating at the Tibetan Buddhist shelter Shaoxiang Baifo – Burning incense to pray for better fortune.

Lu, an accounting graduate, wanted to set up a dance training business in her hometown of Guiyang in southwest China, after failing to find a job after graduating from a second-level university in Beijing.

“There’s no chance for me to get a job in Beijing,” Lu said outside the gilded Falun Hall, a favorite among the temple’s many pavilions for the young unemployed.

Along with many other young people, Lu took part in China’s tough national civil service exam, which attracted a record 2.6 million applicants this year, nearly double the number in 2019. It failed – the success rate was just 1.4 percent.

But she said at the temple that her second wish was to re-sit the exam next year and get a job at the Guiyang Tax Bureau.

“That’s what my parents want,” she said. “They think I should prioritize stability.”

Some have got lucky. Zhou, 26, went to the temple in February to pray for work after losing her job and was returning to thank God.

He successfully secured a position at a medical equipment manufacturer in Zhengzhou. Although the new job earns her less than half what she was earning at a metaverse company in Beijing, she said she “doesn’t mind”.

“There aren’t many opportunities in Beijing,” she said, “so I had to find a job first.”

Posters scream job opportunities at a job fair in Zhengzhou, central China. “Join us for the future!” soliciting an advertising position for graduates to sell electric vehicles. Others seek “courageous” candidates or “attractive women” to sell medical equipment.

But many jobs require 70 hours of work per week and pay less than Rmb3,000 ($400) per month. Wang, a commerce graduate, struggles to be upbeat.

Zhengzhou, the industrial capital of the province of about 100 million people and home to the world’s largest Apple iPhone factory, should be able to offer its graduates better career prospects, said Wang, who did not want his full name published.

The first member of his rural family to obtain a tertiary degree, he wondered whether he would ever be able to find a decent job, let alone buy a house. “At the moment, experience matters more than a university degree because there are so many graduates around,” he said.

As the world’s second-largest economy emerges from three years of COVID-19 restrictions, young unemployed graduates like Wang are bearing the brunt of a slow recovery. In May, 20.8 percent of young people aged 16 to 24 were unemployed, the largest proportion since the data series began in 2018 and higher than European countries such as France and Italy.

The Chinese economy is still creating millions of jobs, and the overall unemployment rate held steady at 5.2 percent in May. Yet many vacancies are in low-level work that is unattractive to university graduates. Beijing’s crackdown on the technology, finance and gaming sectors over the years has eroded what were once lucrative sources of employment.

An employability index for graduates compiled by the China Institute for Employment Research, a Beijing-based think-tank, has indicated an oversupply of labor for six consecutive quarters through the end of 2021. The situation could worsen with a record crop of 11.6%. University of MN graduates will enter the job market in June and July.

While the number of graduates may be small compared to the overall workforce, their plight is a sign of China’s slow economic recovery, which lost momentum in the second quarter as property markets and manufacturing struggled. “The Chinese economy is very weak at this stage, confidence is low, so I would say that’s the biggest factor in youth unemployment,” said Larry Hu, chief China economist at Macquarie.

Others said there are signs that the rise in youth unemployment is a structural issue that may eventually threaten political stability as well.

A report by the China Macroeconomy Forum think-tank, co-authored by prominent economist Liu Yuanchun, said, “We estimate that the problem of youth unemployment may continue for 10 years into the future and may worsen in the short term. ” “If it is handled improperly, it will lead to social issues outside the economic sphere and even become a trigger for political issues.”

President Xi Jinping, who himself was forced to work as a laborer in a rural village during the Cultural Revolution, has little sympathy for graduates reluctant to take low-wage jobs. He has constantly urged the youth Zizhao Kuchi – “Ask for difficulty”.

The government has recently launched a campaign to motivate graduates to “first find a job and then choose a career”. However, such messages only confirm what many young graduates suspect: despite spending for a degree at public universities, which can cost around Rmb30,000 a year – for a family of three Qualifications from all but the best have little value in the job market – about a fifth of the median household income for universities.

In Chengdu, a city known for its laid-back character and tech industries that typically attract young workers from across the country, a statue of a smiling panda bears the slogan “Hard work pays off”. Has happened.

Yang, an accounting graduate from a private second-tier university, has landed a job that pays only 3,000 Rmb a month, about a third of what his father earned as a construction worker.

He said, “My father has paid so much money for my education, he feels the investment is not worthwhile.” She said she couldn’t even imagine saving enough money to buy a house, get married or start a family.

The jobs crisis plaguing China’s graduates is all the more surprising given that this group is by far the most highly educated group in the country.

Economists said Covid restrictions are partly responsible for this. New jobs in the services sector probably waned last year, after adding 16 million jobs in 2018-19, according to Macquarie, as travel, restaurants and other businesses remained closed for three years.

Analysts said the private sector in general, which accounts for 80 percent of urban employment in China, still lacks post-Covid confidence. Private real estate investment, a measure of business activity, turned negative in May for the first time since 2020.

Government crackdown on high-growth sectors that have been big employers of young people, including ecommerce, education platforms, gaming and finance, hasn’t helped. Worried about technological competition with the US, Beijing is now pushing for advanced electronic hardware such as semiconductors. Macquarie’s Hu said in a report that youth unemployment has more than doubled since the government began “de-risking” it in 2018.

“Policy that focuses more on security and less on development also puts pressure on youth unemployment,” Hu said.

“There is a skills mismatch,” said Ishwar Prasad, senior fellow at the Brookings Institution. He said the government was trying to shift the economy to high-tech manufacturing, but the service sector was lagging behind and unable to provide enough jobs for graduates, while the high-tech sector was unable to absorb all the engineering students coming out. Wasn’t ready for. university.

You are viewing a snapshot of an interactive graphic. This is probably due to being offline or JavaScript is disabled in your browser.

Some argue that the underlying causes run even deeper. Michael Pettis, a senior fellow at the Carnegie China Center, said Beijing’s investment model ultimately focused on manufacturing and investment rather than the domestic consumption needed to create jobs.

“Sugar growth is not very labor-intensive,” Pettis said. Chinese policymakers tend to invest in infrastructure, manufacturing and property to drive growth. But the country’s investment to GDP ratio is already the highest in the history of a major economy, he said.

“When you build your manufacturing competitiveness on the basis of low wages, when low wages become a problem because of weak domestic demand, you’re kind of stuck,” Pettis said.

The youth are making every possible effort to improve their employment prospects. Until last year, Beijing’s Lama Temple was mainly visited by older people and prayed for good health. But on a recent hot Sunday, hundreds of unemployed youths were operating at the Tibetan Buddhist shelter Shaoxiang Baifo – Burning incense to pray for better fortune.

Lu, an accounting graduate, wanted to set up a dance training business in her hometown of Guiyang in southwest China, after failing to find a job after graduating from a second-level university in Beijing.

“There’s no chance for me to get a job in Beijing,” Lu said outside the gilded Falun Hall, a favorite among the temple’s many pavilions for the young unemployed.

Along with many other young people, Lu took part in China’s tough national civil service exam, which attracted a record 2.6 million applicants this year, nearly double the number in 2019. It failed – the success rate was just 1.4 percent.

But she said at the temple that her second wish was to re-sit the exam next year and get a job at the Guiyang Tax Bureau.

“That’s what my parents want,” she said. “They think I should prioritize stability.”

Some have got lucky. Zhou, 26, went to the temple in February to pray for work after losing her job and was returning to thank God.

He successfully secured a position at a medical equipment manufacturer in Zhengzhou. Although the new job earns her less than half what she was earning at a metaverse company in Beijing, she said she “doesn’t mind”.

“There aren’t many opportunities in Beijing,” she said, “so I had to find a job first.”