The increase in youth unemployment rates in China is alarming. The economy in the Asian giant is going through the worst of its economic crisis and companies in amid the uncertainty have stopped hiring and some have even reduced their numbers.
Current measurements indicate that in March, 16% of 16-24 year olds were unemployed, up from 13.6% a year earlier. In May, it rose even more, reaching 18.4 % unemployed students.
Li Xunlei of the Zhongtai Securities economist team reported in 2020 that after the Chinese Communist Party’s (CCP) Zero COVID campaign, China lost about 70 million jobs. After the publication of the actual data, the CCP erased the data and dismissed several members of the research team. Since then, few companies have dared to disclose data other than those admitted by the Chinese communist regime.
In June, recruitment service provider Zhaopin.com. reported that only 11 million college graduates found jobs.
Apparently, several of the CCP’s policy decisions such as strict regulatory measures in the technology, education and real estate sectors, which are major employers, have exacerbated the situation.
The CCP has cracked down on the technology industry, and its anti-monopoly campaigns resulted in large corporations having to pay millions of dollars in fines, producing a retrenchment effect on hiring. “Many private internet companies are laying off more than they hire,” said Tianlei Huang, a research fellow at the Peterson Institute for International Economics.
Recruitment in private education was also affected by the ban on for-profit tutoring. In 2021, a report by Beijing Normal University estimated that the CCP’s decision to end tutoring affected 3 million people who were “laid off, forced to change jobs, or transferred to other departments,” said Liu Xiangdong, deputy director of the economic studies department at the China Center for International Economics.
The pandemic and the Covid Zero campaign have made it more difficult for young people to get a job
More than 10 million recent college graduates in China are unemployed. The three years of pandemic and the constant lockdowns in the large industrial cities that absorbed the labor market have had difficulties remaining viable.
With companies contributing only half the output, annual growth projections are only 3%, well below the official target of 5.5%, implying there are 5 million fewer new jobs, according to analysts at Cinda Securities.
David Yang, 23, a graduate student in finance, from Shanghai was in mandatory home confinement for weeks. “You still think you have a bright future, but suddenly you’re banned from leaving your apartment and all the jobs disappear,” he said after sending his résumé to several companies.
Increase in college enrollment has increased unemployment
Graduate students have been facing stiff competition and low job opportunities for years, even before the pandemic.
In 1999, the CCP, in order to stimulate the economy and to slow the employment of college students in a struggling job market, began a college expansion program that has led to an explosion of college graduates. Since then, approximately 5 million students graduate and enter the job market every year.
However, China’s economy has not kept pace with the growing number of skilled workers, who face underemployment, unemployment, and delays in getting a job.
As a result, the value of being a graduate student has been lost due to high competition and a shrinking job market.
Wages were also depreciating to a point where a delivery driver in Shanghai in 2008 earned an average of $930 (6,271 yuan) a month, while recent college graduates had an average starting salary of $893 (6024 yuan), according to research by graduate students at East China Normal University. Similarly, both classes of workers were paid below the minimum wage of $1058 (7132 yuan).
According to Chinese labor occupation site Zhaopin, 2022 college graduates who found jobs have an average monthly salary of $965 (6507 yuan), down 12% from 2021.
About half of the graduates surveyed applied for employment in companies, while 16% planned to delay employment, 19% decided to work independently and 10% continued studying in graduate schools.
Economic recession could generate a vicious circle
The Chinese crisis could generate a vicious circle in companies, causing a drop in wages, further altering domestic consumption, investment, and as a consequence, decreasing employment.
State-owned companies are also unable to absorb surplus personnel. Currently, civil servant jobs are already scarce. For example, in 2021 there were 2 million applicants for only 30,000 positions.
The government, to contain job instability could hire a portion of college graduates to curb rising unemployment, but it would not be able to absorb all of them.
Yunnan Province announced in June that to stimulate employment it will create an annual subsidy of 50,000 yuan ($7,415) to college graduates who take “base jobs” in education, medicine, agriculture, and poverty alleviation.
The export sector, which remained relatively stable during the pandemic, will fall if the partners go into recession.
China can no longer be part of the WTO because its demographic dividends of young and cheap labor have dried up, a large part of the Chinese population is aging, and investment returns are lower. On the other hand, the communist regime also failed to digest the bad debts that resulted from the 2008 stimulus to contain the financial crisis, creating higher inflation.
It seems impossible to contain the economic decline of the Chinese regime, and it is clear that it has entered a vicious circle from which it may never be able to emerge.