Youth unemployment: is China really lying flat?

China’s unemployment rate for young people aged 16 to 24 hit record levels every month from April until June this year when it reached 21.3%, after which the government stopped publishing age-related unemployment data. A scholar from Peking University recently suggested this figure may even be underestimated as it does not account for the 16 million youths that are not in education, employment, or training (NEET) nor actively seeking work – the so-called ‘lying flat’ phenomenon.[1]

During our trip to China in October, one of our objectives was to better understand the possible causes and implications of youth unemployment. We spoke with the admissions office and careers guidance centre at a top-ranking university and interviewed about ten students currently studying at various universities in China.

China is currently experiencing structural unemployment where there is a mismatch between the skillsets of recent graduates (which have skewed towards finance or computer science) and what is needed by current high-growth sectors (engineering and high-tech manufacturing). Over the last decade, the smartest young people in China have dedicated years of study with the hopes of landing lucrative careers in booming sectors such as banking or with the internet giants. With prospects becoming less attractive in those industries, many of those efforts have been in vain.

We talk to students on university campuses in China (photo credit: Arisaig Partners)

Today, the most attractive jobs are in high-tech manufacturing, but for this you need a background in Engineering. Companies like BYD and Inovance might offer starting salary packages of RMB 250 – 300k (USD 34 – 41k) per annum for a three-year training contract. While these companies may not have been able to attract the best graduate talent three or four years ago, now they have their pick from the top universities.

Students are catching on. In 2022, Zhang Xue Feng, a famous influencer on Douyin (TikTok’s mainland China counterpart) who makes videos on undergraduate and postgraduate major selection, started recommending that new students choose Engineering related majors.  According to Fudan University’s Admissions Office, Engineering has become the most popular major since last year.  As a result, the ‘gaokao’ (China’s national undergraduate admissions exam) requirements for the Engineering department are now higher than those for Economics, implying a change in focus for the smartest of the current cohort. To help further ‘futureproof’ its students and in response to priorities set by the Ministry of Education, Fudan is implementing a shift away from rote learning e.g., by making courses on critical thinking, liberal arts, and AI compulsory for first years.

Another area where there are plenty of jobs available is blue-collar work. We interviewed some restaurant waitstaff who said that job seeking was easy. In the worst-case scenario, they could go on an online recruitment platform such as Boss Zhipin to find a job in a large manufacturing factory and earn RMB 5,000 (c. USD 700) a month (with overtime), net of accommodation fees. We also spoke with investor relations of Boss Zhipin, who confirmed that this year the blue-collar jobs market has indeed been more buoyant than white-collar, particularly in the service sector.

However, blue-collar work is not regarded as an option for many graduates. Even if their major is no longer in demand, many would rather delay entering the workforce than accept what they see as a ‘bad job’. Blue-collar work is looked down upon and does not offer nearly the kinds of ‘returns on education’ they expect. These young people would prefer to invest in their future by pursuing a master’s or PhD and hope that economic conditions improve in the meantime. The number of students registering for the annual postgraduate exam in China more than doubled between 2017 and 2023 (from 2 million to over 4.7 million)[2]. This trend is likely to continue while youth employment prospects remain weak. Of the ten students we interviewed, all intend to do some form of postgraduate degree before trying to find a job.


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