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Earlier this week China announced the reopening of its economy, raising hopes of a rebound. However, the world’s largest economy is facing high unemployment among its youth which reflects the deeply troubled labor market of the country. China’s statistics bureau said unemployment among 16- to 24-year-olds in the country hit a record high of 18.2% in April, breaking the previous record of 16.8% seen in July and August of 2020.
“The reason why China’s unemployment rate is so high is predominantly because of two factors, one of which is the renewed lockdown policies that are now spreading across the country as Omicron breaks out and the other is due to their long-standing regulatory policies due to common prosperity which started in 2021,” Ethan Yang, China expert and Economic analysts, told NTD Canada in an interview.
Why is China unemployment rising?
Yang and several other analysts attribute the poor employment rate to the crackdown on the edtech and technology sectors. In 2021, China introduced a set of policies that clamped down on edtech firms, once the popular trade scrips on Wall Street and for venture capitalists.
NYSE-listed firms New Oriental Education and Technology and TAL Education Group have lost over 80% of their value after the government clampdown. Several start-ups shut shop while others fired employees. Additionally, the regulatory crackdown on the technology sector has seen juggernauts like JD.com, Jingxi, Didi Global, and Tencent reducing their headcount
Cheng Jie, associate professor at the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, in an Op-ed for China Daily said that youth employment in China is complicated because of the impacts of cyclical, frictional, and structural unemployment. The article attributes the state of unemployment to fresh graduates pursuing a small number of careers and Jie suggests youngsters should diversify their career options to the grassroots level, armed forces, or private business.
The issue might persist in the medium-term
While the youth unemployment rate is hitting record highs, China is due to produce a record 10.76 million fresh graduates in 2022, as per data from China’s Ministry of Education. Covid-19 restrictions forced foreign firms to pull out of the country, whereas domestic companies are laying off staff, which is likely to leave several youngsters struggling to get a job.
The demand for college graduates in China dropped 8% year-on-year during the first quarter of 2022, while the number of applicants increased by 75% year-on-year, as per a report released by the China Employment Research Institute of Renmin University and Chinese jobs board Zhilian Recruitment.
Students in China are in a sour mood as they struggle to find jobs and the pressure to compete with millions is becoming a tough choice. A new trend is taking over among students in China, who are choosing to drop out of the labor market altogether and joining a movement called ‘lie flat’ — which means doing the bare minimum to get by.
