Visitors pose for photos on an outdoor deck overlooking the central business district in Beijing, on June 13.Mark Schiefelbein/The Associated Press
Nancy Qian is professor of managerial economics and decision sciences at Northwestern University’s Kellogg School of Management.
In May, China reported that youth unemployment (among those aged 16 to 24) had reached a record-breaking 20.8 per cent, with the high-paying, high-skilled jobs that university graduates are trained for growing scarcer. Since mid-2021, hundreds of thousands of positions have been eliminated in the tech sector, owing to the COVID-19 pandemic, stringent capital and antitrust regulations, and the government’s broader “tech crackdown.” And, as the rapidly changing policy environment adds to the uncertainty, cutbacks are also coming to other high-skilled sectors like finance.
In June, the Chinese internet was flooded with despairing photos and messages from new graduates whose only employment prospects lay in low-paying sectors, where there is still some job growth. Chinese students and their parents are finding this new economic reality difficult to accept, given the tremendous sacrifices they made for higher education.
The Chinese education system is one of the most competitive in the world, not least because college admission is determined by a single standardized national exam, the gaokao. By the time most graduates from good colleges arrive on the job market, they have committed many years of their youth to intensive study. The pressure to master the core curriculum – math, science and literature – is so great that even elementary schools have cut back on non-academic classes such as physical education and music.
Meanwhile, these graduates’ families have made sacrifices that are hard to imagine in many other countries. Children as young as 10 often do four hours of homework a day, requiring constant encouragement, monitoring and coercion from parents. All this is done with the expectation of enjoying future security in a rapidly growing economy – except that now economic growth has waned.
Young women tend to suffer more than young men in the labour market. Although Chinese girls outperform boys across subjects and age groups, they have long been prevented from entering traditionally male industries such as civil aviation, which previously had explicit anti-female quotas. These hurdles reflect China’s strong tradition of preferring sons. There are 116 boys for every 100 girls among those aged 15-19, compared to 98 boys for every 100 girls in the United States.
Moreover, women’s employment prospects were further reduced after the government started pushing, in the mid-2010s, to increase fertility. With the birth rate falling to an all-time low – setting the stage for massive economic problems down the road – the central government abandoned its one-child policy, and many provinces have increased maternity leave above the national minimum.
But this has made employers more reluctant to hire women, with many voicing concerns about the cost of future time off for bearing and rearing children. The assumption is that a man will work as many hours as you need, no matter how many kids he has, whereas a woman might not.
These cultural norms are colliding with the contraction of high-skill jobs. If there are more jobs than workers, employers have no choice but to hire women and provide the necessary support and benefits. But with 11-40 applicants for every opening, China has become a buyer’s market. The immediate result is that young women will be forced to take even lower-paying jobs than men with similar qualifications; and some may simply exit the labour force altogether.
Young women’s darkening employment outlook is just one of many signs that the Chinese economy is headed in the wrong direction. The slowdown from 10 per cent annual GDP growth was inevitable. But current patterns raise profound concerns for China’s economic outlook, especially considering that the government’s policies for addressing them have not worked.
To be sure, one way to address youth unemployment is to encourage young graduates to return to rural areas and take lower-paying manual jobs. But for a middle-income country where economic development is closely associated with the growth of cities, ruralization would represent regression. It would not increase wages, motivate future generations to pursue a higher education (which is necessary for creating higher-paying, high-skilled jobs), or provide women with more equal opportunities.
To stem the reversal of its economic fortunes, China must address the root of the problem: the lack of high-paying, high-skilled jobs. If the economy is going to grow (or at least avoid a contraction) in the long run, the government must create the conditions for job creation in high-productivity sectors, and for greater investment in higher education.
Copyright: Project Syndicate, 2023.