Job opportunities abound at an employment fair in Zhengzhou, China, enticing graduates with promises of a bright future. However, many of these positions require grueling 70-hour work weeks and offer meager salaries as low as Rmb3,000 ($400) per month. Wang, a recent commerce graduate, finds it difficult to muster enthusiasm for these job prospects.
Zhengzhou, known as the industrial capital of its province and housing the largest Apple iPhone factory in the world, should ideally offer better career options for its graduates. Wang, the first in his rural family to attain a tertiary degree, wonders if he will ever find a decent job, let alone afford a house. He laments the inundation of graduates in the job market, emphasizing that experience now holds more value than a university degree.
As China, the world’s second-largest economy, emerges from the Covid-19 pandemic, young unemployed graduates like Wang bear the brunt of a sluggish recovery. In May, the unemployment rate for 16 to 24-year-olds reached 20.8%, the highest since data collection began in 2018, surpassing rates in European countries like France and Italy.
While the Chinese economy continues to generate millions of jobs, many of them are low-end positions unappealing to university graduates. Beijing’s recent crackdown on sectors such as technology, finance, and gaming has further restricted employment opportunities in previously attractive industries. An unemployment index for graduates compiled by the China Institute for Employment Research reveals an oversupply of labor for six consecutive quarters since late 2021. The situation might worsen as a record number of 11.6 million university graduates enter the job market in June and July.
Though university graduates make up a small fraction of the overall workforce, their predicament reflects China’s faltering economic recovery, which saw a slowdown in the second quarter due to struggling property and manufacturing sectors. Larry Hu, chief China economist at Macquarie, attributes the rising youth unemployment to the weakness of the Chinese economy and low confidence levels. Economists warn that this issue may have long-term implications and even pose a threat to political stability if not adequately addressed.
President Xi Jinping, who experienced arduous labor himself during the Cultural Revolution, lacks empathy for graduates unwilling to accept low-paying jobs. He consistently urges young people to embrace hardships. The government’s recent campaign to encourage graduates to prioritize finding any job over pursuing their desired careers only confirms the perceived lack of value of degrees from all but the most prestigious universities in the job market.
In Chengdu, a city known for its relaxed atmosphere and thriving tech industry, a statue of a cheerful panda bears a sign proclaiming that happiness stems from hard work. Yang, an accounting graduate from a second-tier university, secures a job that pays a meager Rmb3,000 a month, a fraction of her father’s earnings as a construction worker. She feels the weight of her father’s investment in her education and believes it has not paid off. Yang doubts she will ever save enough money to buy a home, get married, or start a family.
The plight of unemployed graduates in China is surprising given that this generation is the most highly educated the country has ever seen. The Covid-19 pandemic undoubtedly contributed to the job crisis by stifling new job creation in the services sector, which had seen significant growth in previous years. Additionally, the private sector, responsible for 80% of urban employment in China, remains wary post-Covid, with private fixed-asset investment turning negative for the first time since 2020 in May.
Beijing’s crackdown on high-growth sectors that were significant employers of young people, such as e-commerce, education platforms, gaming, and finance, has further exacerbated the situation. Fearing competition with the US, Beijing has shifted its focus to advanced electronic hardware like semiconductors. Consequently, youth unemployment has more than doubled since the government initiated this “de-risking” approach in 2018.
A skills mismatch exacerbates the problem, according to Eswar Prasad, senior fellow at the Brookings Institution. While the government aims to transition the economy towards high-tech manufacturing, the services sector lags behind and cannot provide sufficient employment for graduates, while the high-tech sector remains ill-prepared to absorb the influx of engineering students from universities.
Some argue that the underlying issues run deeper. Michael Pettis, a senior associate at the Carnegie China Center, points out that Beijing’s investment model still prioritizes manufacturing and investment over the domestic consumption necessary for job creation. Chinese growth relies less on labor-intensive industries, creating a hurdle when low wages become problematic due to weak domestic demand.
Desperate to improve their employment prospects, young people are resorting to various means. The Lama Temple in Beijing, traditionally a popular spot for older individuals seeking good health, now attracts hundreds of unemployed young people burning incense and praying for better fortunes. Lu, an accounting graduate, failed to find a job in Beijing and wishes to establish a dance training business in her hometown instead. Alongside many others, she attempts the highly competitive national civil service examination, which this year drew a record 2.6 million applicants, nearly double the number in 2019. Though her chances are slim, Lu intends to try again next year to secure a job at the Guiyang tax bureau, fulfilling her parents’ desire for stability.
In contrast, Zhou successfully secured a position at a medical equipment manufacturer in Zhengzhou after losing her job. Despite earning less than half her previous salary in a Beijing metaverse company, she is content with her current situation. Opportunities in Beijing are scarce, and she believes it is important to adapt to the circumstances.
Overall, the job crisis facing China’s graduates is a complex issue with multiple contributing factors. It stems from an ailing economy, crackdowns on key industries, a mismatch in skills, and an investment-focused growth model that hampers job creation. The repercussions extend beyond employment, potentially posing threats to political stability. As young graduates grapple with low-paying, unfulfilling jobs, they seek alternative paths and hold on to hope for a brighter future.
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