China's youth unemployment situation could be far worse

On graduating this year, Jiang Wenxin, a voice major at an art school in Liaoning, made a decision that stunned his classmates: to work at Starbucks.

Some of Jiang's fellow vocal music graduates chose to pursue postgraduate studies, while others took up teaching positions in education and training institutions. However, neither of these paths seemed ideal to him. "The tuition fees for music majors are too expensive, and my family cannot support me for further studies. The education and training industry has high entry barriers in big cities, while small cities offer low wages with no future for growth. So, why not find other jobs in a big city for now, and take it step by step?"

Currently, Jiang earns a monthly salary of 4,000 RMB (US$560) in Shanghai, which is barely enough to cover typical housing rents. Fortunately, he stays with relatives, saving him that part of his living expenses. The 23-year-old admitted that he even considered becoming a food delivery rider, but found that market already saturated. "The general climate is bad now, it's really hard to find a job."

Like Jiang, this year's graduates spent a significant portion of their campus life amid lockdowns. They have just emerged from three years of the pandemic and are now facing the "most challenging job season" - a record-breaking 11.58 million fresh graduates are competing with previous graduates whose job searches were delayed due to the pandemic, all vying for a place in the first post-pandemic job market.

With the unprecedented surge in job demand and slow economic recovery, the competition for jobs is intense due to the supply-demand imbalance, and even students from prestigious universities are feeling the pressure.

Yu Min (pseudonym) studies at Tongji University, one of the top universities in Shanghai. However, the job search for this master's degree student in environmental engineering has not been smooth. The increasing number of graduates each year has raised the recruitment threshold, and the "educational hierarchy" is obvious from the initial resume screening.

Yu explained that undergraduate and master's students at "Double 9" universities (referring to the top 39 universities in China, known as the "985 Project" universities) usually receive the first batch of interview invitations. The second batch is for students with undergraduate degrees from "211 Project" universities (the top 115 universities in China) and master's degrees from "985" universities.

Only after that does it come to candidates like Yu, who have undergraduate degrees from non-985 and non-211 universities, and master's degrees from "985" universities. "Many large companies usually fill their positions in the second round, and state-owned enterprises often require 'Double 9' educational backgrounds," she said. "When we send out resumes, they often go unanswered."

After sending out 60 to 70 resumes, Yu Min finally managed to secure a job in a newly established state-owned enterprise. She said that this enterprise had lower educational requirements compared to traditional state-owned enterprises, which allowed her to "get through by luck".

Besides the "involution" or over-competition based on educational backgrounds, the fluctuating pandemic also created more obstacles for fresh graduates in their job search. Yu recalled that last year, the school remained closed for an extended period, making it difficult for employers to conduct on-campus recruitments, and students were unable to participate in off-campus internships. "I heard that friends in other cities were being accepted during their internships, or that companies were filling positions with people from other regions when they couldn't recruit on-campus in Shanghai - everyone became anxious."

The pandemic disrupted the job plans of university students and affected the main source of their employment - private enterprises.

According to data from the recruitment platform Zhaopin, while the class of 2022 were looking for jobs, recruitment by private enterprises for university students decreased by 20.3% compared to the previous year. Also, the number of active business users on the job-seeking website BOSS Zhipin decreased from 4.1 million in the first quarter of 2022 to 3.6 million by the end of the year, indicating that over 10% of businesses stopped or froze recruitment.

At the same time, the three industries that used to provide over half of the job positions for fresh graduates - internet, education and training, and real estate - have seen a significant decline over the past three years. Not only has the scale of recruitment noticeably decreased, but there have also been frequent cases of new graduates in these industries having their job offers revoked or being laid off.

According to a research report from the Development Research Center of the State Council of China, the resignation rate of 2020 and 2021 graduates from these three industries increased by 30% (internet), 30% (education and training), and 19% (real estate) respectively from July 2021 to May 2022.

But even as university graduates struggle to find employment, some companies are fretting over a labour shortage.

Liu Chao, an anchor on the short video platform Kuaishou, said many new energy battery companies are currently recruiting employees with at least a high school education. "Although companies prefer employees with higher educational qualifications, few university students apply, as most are not willing to be blue-collar workers in factories."

The oversupply of university students and shortage of blue-collar workers has led to structural unemployment and limited the development of the Chinese economy. The Chinese Ministry of Human Resources and Social Security forecasts that by 2025, there will be a shortage of 30 million workers in the manufacturing industry.

Amid the severe job market, "Kong Yiji literature" became popular among young people, mocking how they are educated but cannot find a job. State media CCTV News published a commentary saying that Kong Yiji fell into difficulties because he could not drop the airs of a scholar, and was unwilling to change his situation through labour.

Assistant Professor Lu Xi of the Lee Kuan Yew School of Public Policy (LKYSPP) at the National University of Singapore said while there are structural reasons why it is difficult for university graduates to find jobs, it is not something that can be eased by simply "putting aside one's ego".

He said: "Many university graduates have already gone into ride-hailing and food delivery, quickly saturating the market. When they take jobs in factories and construction sites, the direct consequence is that the industry's average wages are lowered due to increased supply."

Prof Lu believes that the biggest problem in the current job market is weak economic growth and pessimistic investment expectations, which have led to insufficient demand on the supply side. In addition, the past three years of pandemic lockdowns have disrupted the pace of the job market, causing a large number of graduates to postpone entering the labour market. The backlog of employment demands is expected to continue for a long time, with a concentrated outbreak starting this year.

"If I had to give advice to today's university students, it would be to just work if they can, and not expect the situation to improve in the next two or three years."

Jiang Wenxin lamented that everyone used to pursue undergraduate degrees with great enthusiasm, only to realise after graduation that university graduates are not valued. If given a chance to start over, he would even consider attending a vocational school to learn a skill.

Changing the topic, he said: "But I have made it into what is considered a large company. As long as I work hard, there will be opportunities for me to be promoted to store manager or regional manager in the future. Unlike those classmates who are still hesitating, at least I have taken off Kong Yiji's robe and put aside my ego."

Shi Guandi first applied for a master's degree at the end of last year. Alas, she contracted Covid during the first infection wave after China lifted its stringent measures. Thus, she did not get admitted to her desired college and major. Her parents told her "not to worry about the finances" and encouraged her to follow her dreams, whether it was to study or to work.

Graduates like Shi who can do a full-time master's degree mostly have affluent backgrounds. Peking University's 2021 graduate employment report showed that more than 60% of the graduates "waiting for employment" were from families of middle income or higher. Adequate family support and the competitive employment situation have led to greater numbers of graduates applying for graduate school.

According to statistics from the Ministry of Education, between 2005 and 2016, the number of postgraduate candidates increased by an average of 50,000 per year. However, since 2017, the figure has been increasing by an annual average of nearly 500,000. Just last year, a record 800,000 more people sat for the postgraduate examination than the previous year.

The influx of postgraduate candidates could not be accommodated even with the higher education institutions expanding their intake - postgraduate acceptance rates fell from 36% in 2018 to 27% in 2022.

Zhuo Xian, vice-department director at the Development Research Center of the State Council, wrote in an article last year that China's "postgraduate and civil servant fever" has delayed nearly 5 million college students from getting employed.

Taking the graduating class of 2022 for example, to focus on preparing for the postgraduate examination, 54.6% of fresh college graduates only started sending out their resumes in January 2022, missing out on the "golden period" for job hunting before the Chinese New Year. As a result, their success rate in landing a job was 34 percentage points lower than other fresh graduates who started their job searches half a year earlier.

However, even if graduates successfully enrol in a master's programme, they are just postponing their "employment anxiety" for another few years. When the pandemic first hit China in 2020, Chinese colleges significantly increased their postgraduate intake by nearly 190,000. But these highly educated youths did not expect employment prospects to worsen three years later.

Luo, a PhD candidate studying meteorology at a university in Gansu, enrolled in a master's programme in 2018 and then continued pursuing a doctorate degree in 2020. She told Zaobao that as her field is rather specialised, a bachelor's degree would not be enough to snag a role in the big cities.

Luo initially embarked on a master's degree to stand out from the competition but later decided to take up scientific research upon encouragement from her supervisor. But when she embarked on her PhD studies, she realised it was tougher than she had imagined, which made her consider finding a job instead. But she soon learnt the hard fact that her degree depreciates much faster than the time it takes for her to obtain it.

After experiencing a tough internship at a small county in her undergraduate days, Luo was convinced that she had to land a job in the bigger cities by obtaining postgraduate qualifications. She lamented, "But two years later, that county now only accepts applicants with a master's degree!"

Zhuo notes that as the value of unemployed college graduates drops over time, and the high youth unemployment rate becomes a long-term problem, successive years of employment gaps tend to snowball into increasing employment pressure on college students. He feels that the practice of providing two years' student benefits for unemployed graduates should be removed to encourage students to actively look for jobs.

After many sleepless nights, Luo is sure that she doesn't regret her decision. She said, "My PhD journey has taught me things beyond my field of study. If I did not pursue a doctorate degree, I would keep thinking about it. Now that I have experienced it, I've nothing to worry about anymore."

Latest statistics released by the Chinese National Bureau of Statistics on 15 June indicate that the surveyed unemployment rate among the 16-24 years age group was 20.8% in May, up 0.4 percentage points from the previous month and once again setting a record high since the statistic became available in 2018.

While the youth employment rate (three times that of the overall unemployment rate) seems appalling enough, college students and academics have shared that the true extent of youth unemployment could be much grimmer.

Jiang Wenxin told Zaobao that most of his peers were not able to find jobs even when graduation was just around the corner. Yet the school makes them submit an employment agreement as proof of having found a job or they "would not receive their academic certificate".

Commonly known as the "three-party agreement", this employment agreement is signed between the graduate, their employer and the college, and used in official statistics to gauge the employment situation of graduates.

Jiang said that the school would often pressurise students through their teachers and demand that students who have yet to find a job to "just get a signature from some employer" so that the employment statistics would look good. "Everyone knows just how unreliable these statistics are," he said.

On 1 June, WeChat official account Caijing Shiyiren (财经十一人) published an article written by Wang Mingyuan, a researcher at the Reform and Development Institute of Beijing. Wang argued that the unemployment rate for those aged 16 to 24 is not representative of the overall youth unemployment rate.

The labour force participation rate, especially of those aged between 16 to 20, is not high even if these teens are not attending school, and has been hovering at above 18% for a long time. Thus, Wang looks at the employment status of those aged 16 to 40 to measure the youth unemployment rate.

In the now-deleted article, Wang looked at a variety of indicators including the number of fresh graduates employed and the number of unemployed people in the workforce, and found that China has seen an increase of 54 million unemployed youths since the three-year-long pandemic, among which 15 million of them are fresh graduates who have yet to find a job.

Wang predicts that the next few years will be the most challenging period for employment since China's reform and opening up. If the employment problem cannot be solved, the size of China's unemployed youths may reach 50 million in five years, which means that there will be one unemployed person in every four to five families, triggering a series of deep crises.

Zhuo of the Development Research Center of the State Council pointed out that at the end of 2020, college graduates accounted for 46% of the 34 million-strong urban youth workforce aged 16 to 24, but a whopping 66% of unemployed youths. Thus, the key to reducing the high youth unemployment rate is in easing the challenges faced by college students in their job hunts.

Local governments around China have also launched employment campaigns in recent months, with the populous Henan province rolling out a 100-day plan to "dynamically clear" youth unemployment. Departments including the Ministry of Civil Affairs and Ministry of Education also issued a joint statement in late May, requiring increased efforts in recruiting full-time community workers from college graduates.

Wang thinks that one cannot expect institutional expansion or "rural revitalisation" to solve the youth unemployment problem. Last year, state-owned enterprises and the government hired a combined total of 860,000 fresh college graduates, accounting for a mere 5% of college graduates' demand for jobs.

And if state-owned enterprises are allowed to expand as they wish, this inevitably leads to saturation and efficiency losses. At present, the size of the rural economy is only equivalent to the revenue of ten Huaweis or three PetroChinas, and can only offer a maximum of one to two million jobs to highly-educated youths.

He pointed out that over the last decade, China's job growth was mainly spurred by the development of private enterprises, the digital economy and the service industry. Thus, to truly solve the employment problem, one should start by improving the situation in these sectors. Aside from this, youths should also be encouraged to set up their own businesses. "A promising society is one where youths are actively creating and achieving their dreams, rather than being constantly on the road to more examinations," he said.

This article was first published in Lianhe Zaobao as "碰上最难就业季 大学生求职路茫茫".

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