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Over the next few weeks, China will produce a record 10.8 million university graduates. Finding jobs for them is proving an unexpected headache for President Xi Jinping’s government, which is struggling to contain Covid-19 outbreaks with citywide lockdowns.

The outlook is so dire that some universities have urged seniors to delay graduation. The students complained to Caixin that they were not allowed to defend their thesis unless they found a job. Some were forced to declare that they would be “independent” just to be able to graduate. In April, less than half of graduates had received a job offer, according to online recruitment site Zhaopin Inc.

State-funded universities are under strong political pressure. In May, urban youth unemployment hit a record high of 18.4%. In July, the peak of graduation season, it could reach 23%, according to Bank of America Merrill Lynch estimates. As such, universities must do their part to reduce this number. After all, tight Covid controls at the expense of skyrocketing youth unemployment don’t bode well for Xi, who is set to win an unprecedented third term in office at the end of this year.

Increasingly, recent university graduates hope that the government can provide them with their first jobs. Public companies are the most sought-after placements, while only 17.4% of the class of 2022 want to work for a private company, according to the latest Zhaopin survey.

However, this is not what the state is prepared to offer. Since the late 1990s, state enterprises have reduced hiring, as the number of urban workers has halved to around 55 million. Government jobs are also in high demand, but the number of new recruits has remained stable at around 170,000 per year.

Instead, over the past decade the private sector has become China’s largest employer, with around 150 million urban workers. In the cities, there are also more than 110 million independent residents, who land part-time contracts, odd jobs or on-demand work. A few have managed to become social media influencers.

In a clear sign of the scarcity of jobs in the city, the southwestern province of Yunnan recently offered new university graduates an annual subsidy of 50,000 yuan ($7,464) per person to work in rural villages. Some netizens joked that it was a replay of the “movement to the countryside” of 1968, when Mao Zedong sent privileged urban youth to remote areas to learn from farmers.

As to whether Yunnan can deliver, anyone can guess. The grant is no small sum – it would amount to about five months of the average starting salary for elite graduates of Tsinghua University.

Two years ago, China’s labor market rebounded rapidly from the first outbreak of the pandemic. There wasn’t a lot of economic trauma back then. Only a small area around Wuhan, Covid Ground Zero, was affected. Within three months, life was back to normal.

The labor market is no longer so resilient today. A year-long tech crackdown has wiped out much of the demand for young, educated and savvy internet workers. Shanghai and Beijing – which produced 18 of the top 20 schools with the highest graduate salaries – have been grappling with Covid outbreaks since April.

Meanwhile, the skyrocketing college admission rate over the past decade is producing a labor force increasingly incompatible with the needs of the economy. New university graduates now make up more than half of the new labor supply, estimates HSBC Holdings Plc. Literature and the arts are among the most popular majors.

During his rule, Xi elevated the economic status of public entities and suppressed the “disorderly capital expansion” of the private sector. Well, he has more than he wished for. Attracted by the prestige and financial security of the state, young people now want its government to be able to offer jobs. Besides being president for life, perhaps Xi could also become China’s director of career planning?

More from this writer and others on Bloomberg Opinion:

• China’s Big Problem Xi Jinping Can’t Solve: Shuli Ren

• Do we owe Generation Z for their Covid-related misery? : Chris Bryant

• Do you feel stuck with a salary of $250,000? Wait: Alexis Leondis

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She holds the CFA charter.

More stories like this are available at bloomberg.com/opinion

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