China set to meet employment challenges
College graduates in China will face some unprecedented challenges this year in finding a job due to the imbalance between job opportunities and the number of candidates.
The number of youths graduating from college this year is likely to be about 10.76 million, 1.67 million more than last year. Add to that the high numbers of overseas students expected to return home this year owing to the COVID-19 pandemic and those who graduated last year or before but could not find a job and you will realize the huge pressure on the labor market.
Besides, the Chinese economy is facing the three-fold pressure of shrinking demand, a slump in supply, and weakening market expectations amid the fight against the pandemic and efforts to revive the economy.
Given these facts, the government needs to implement more effective fiscal and monetary policies, and take measures to create more employment opportunities. Also, efforts should be made to prioritize total employment and address the structural contradictions of the job market.
State Information Center data show that in 2021, the number of students who returned from abroad for the first time exceeded 1 million, about 84.74 percent of the total, and fewer students chose to study abroad due to the pandemic.
For example, 8.17 percent of students who graduated from Peking University and 6.9 percent from Tsinghua University chose to continue their higher studies overseas in 2021, compared with 13.34 percent and 9.6 percent respectively in 2020.
In addition, market entities' recovery has been slow, and there is a gap between supply and demand in different sectors. The industrial sector has recovered relatively well from the impacts of the novel coronavirus pandemic, but the service sector, small and medium-sized enterprises, and private businesses face bigger challenges.
Amid all this, rising raw material prices and the difficulty in raising funds have added to the pressure on the real economy and innovation-oriented businesses. In short, the demand for new employees is low in China because of the changing international environment and the impacts of the pandemic.
Fortunately, although graduates face cyclical, frictional and structural unemployment risks, they have never experienced widespread unemployment thanks to the Chinese economy's stable development and active labor market which can address the short-term imbalance between demand and supply.
For instance, at the height of the pandemic in July 2020, the unemployment rate among the 20-24 age group, mostly college graduates, was 3.3 percentage points higher than the same period in 2019, but the figure dropped 7.2 percentage points in December 2020.
This indicates that short-term and unexpected disruptions and seasonal factors did not affect the trend of graduate recruitment. Human capital is the foundation which helps a society to adapt to economic changes and overcome external shocks, which in turn enables fresh graduates to successfully face challenges and risks.
But youth employment in China is complicated because of the impacts of cyclical, frictional and structural unemployment. With regard to frictional unemployment, most graduates enter the job market at the same time every year, making it hard for them to find a suitable job. As for structural unemployment, university education, to a large extent, cannot always meet the demand of a rapidly developing economy due to the lack of adequate education reform. Worse, the demand for labor has been unstable because of the pandemic.
Furthermore, similar career choices of graduates aggravate the structural contradiction. For example, according to a recent Peking University report, almost 50 percent of its graduates in 2021 found jobs in government departments and State-owned enterprises. And a 2020 report on Chinese students studying abroad showed that 21 percent of the returnees joined government departments and 25 percent joined SOEs.
No wonder there is a gap between supply and demand in SOEs and private businesses－the latter faces a large shortage of skilled talents, while the number of people who have registered to sit the 2022 national civil service exam reached a high of more than 2 million. The popularity of the civil service exam increased because more college graduates look for a stable job, which reflects their pessimism over future prospects in other sectors.
The graduates' pursuit of a small number of careers hampers the efficient allocation of human resources and aggravates the structural contradiction, and will have a negative effect on their social network and career development.
As such, the government should implement expansionary fiscal and monetary policies, in order to ensure the economy recovers well and enough jobs are created. It should also build talent pools to boost youth employment and help graduates to overcome difficulties, and increase public investment, further develop infrastructure, and reduce taxes to bolster the economy and create more jobs.
Moreover to encourage college graduates to work at the grassroots level in remote areas, join the armed forces or start their own business, the government should introduce favorable policies, as well as optimize the recruitment service and training system, and monitor graduates' employment situation and, if need be, take remedial measures to help them adjust to a professional work environment.
The government also needs to integrate resources of communities, job training centers, vocational schools and universities to prompt unemployed youths to undergo skills training, and reduce taxes and fees to encourage employers to train young talents.
And while the government and the market should cooperate to balance the relationship between supervision and recruitment in sectors that have a high number of posts for graduates, the government should work to establish an inclusive social security system, pilot a universal basic income plan－giving every adult citizen a set amount of money regularly－so as to protect their rights in the labor market.