China is grappling with a pressing issue that threatens its economic stability – a surge in youth unemployment. The country, which boasts the world’s second-largest economy, is struggling to provide job opportunities for its growing number of graduates, leading to a concerning rise in unemployment rates among the youth.
In June, the unemployment rate for individuals aged 16 to 24 skyrocketed to a staggering 21.3%, up from 15.3% in 2022, marking a 25% increase in just one year. This alarming surge prompted the Chinese government to halt the release of further statistics, citing the need to revisit their method of calculating youth unemployment due to the ever-evolving economy and society.
Fu Linghui, spokesperson for China’s National Bureau of Statistics, suggested that the rising number of students in this age group contributed to the employment challenges. However, it’s worth noting that China had not previously included students in their unemployment figures until 2018, as reported by the BBC.
Overall unemployment in China, while showing some improvement, remains a concern. In July, it stood at 5.3%, down from a peak of 6.1% earlier in the year, but still higher than the pre-pandemic rate of 4.6% reported by the World Bank. In 2022, China reported an overall unemployment rate of 4.9%.
The situation for youth unemployment worsened in 2022, with rates averaging 18% throughout the year and briefly spiking to nearly 20%. This concerning trend has the potential to significantly impact China’s economy, which has already experienced a slowdown from its previous rapid growth in the early 2010s. The pressure on wage growth and a decrease in consumption could further hinder economic growth and potentially lead to social instability.
A report from Goldman Sachs attributes this trend to a growing mismatch between the skills graduates possess and those demanded by employers. During the pandemic, the number of graduates in education and sports disciplines surged by over 20%, but educational institutions reduced their hiring during the same period. Regulatory changes in industries, particularly in information technology, have also contributed to weakened demand for workers.
China is expecting approximately 12 million new graduates in 2023, up from 11 million in 2022 and a significant increase from the roughly 9 million in 2021, according to estimates from China’s Ministry of Education. This influx of graduates, without sufficient job opportunities, exacerbates the youth unemployment crisis.
Ho-Fung Hung, a professor of political economy at Johns Hopkins University, suggests that China’s only way forward is to ease regulations on the private sector, allowing it to grow more freely and create more jobs. President Xi Jinping’s attempts to encourage urban youth to move to the countryside have been hindered by diminishing arable land, making this option less viable.
To address the issue, Beijing is exploring various tactics, including mandating state-owned companies to hire more graduates and encouraging youth to consider blue-collar jobs if they do not respond to the call for rural farming. However, these efforts are seen as inadequate in addressing the root causes of the problem, and it is expected that youth unemployment will continue to plague China’s economy for the foreseeable future.
In conclusion, China’s struggle to cope with surging youth unemployment poses a significant challenge to its economic stability. As the country grapples with a growing number of graduates and a shrinking job market, addressing this issue is crucial for sustaining economic growth and social harmony in the world’s second-largest economy.
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