Xi Jinping, China’s chief career planning officer?
State-funded universities are under strong political pressure. In May, urban youth unemployment hit a record 18.4%. By July, the peak of the closing season, it could hit 23%, according to Bank of America Merrill Lynch estimates. Therefore, universities must do their part to keep this number low. Finally, tight Covid controls at the expense of rising youth unemployment are not looking good for Xi, who is expected to win an unprecedented third term later this year.
New university graduates are increasingly hoping that the state will be able to place their first jobs. State-owned companies are the most desirable positions, while only 17.4% of the class of 2022 would like to work for a private company, according to the latest Zhaopin survey.
But the state doesn’t want to offer that. Since the late 1990s, SOEs have reduced the number of new hires, halving the number of city workers to only about 55 million. Jobs in the public sector are also in demand, but the number of new hires is stable at around 170,000 per year.
Instead, the private sector has become China’s largest employer in the past decade, employing some 150 million urban workers. There are also more than 110 million self-employed people in cities who take on part-time jobs, odd jobs or jobs in the gig economy. Some managed to become social media influencers.
In a clear sign of how scarce urban jobs have become, the southwestern province of Yunnan recently offered an annual grant of 50,000 yuan ($7,464) per person to new college graduates to work in rural villages. Some netizens joked that it was a repeat of the 1968 Rural Rural Movement, when Mao Zedong sent privileged urban youth to remote areas to learn from peasants.
Whether Yunnan can deliver is unclear. The grant is no small sum — it would be about five months of the average starting salary for elite Tsinghua University graduates.
Two years ago, China’s labor market recovered quickly from the initial outbreak of the pandemic. There wasn’t much economic trauma back then. Only a small area around Wuhan, Covid Ground Zero, was affected. Within three months life was back to normal.
The labor market is currently not that resilient. Years of tech crackdowns have wiped out much of the demand for young, educated, and internet-savvy workers. Shanghai and Beijing – which have produced 18 of the top 20 schools with the highest graduate salaries – have been grappling with Covid outbreaks since April.
Meanwhile, the skyrocketing college admissions rate over the past decade is producing a workforce that is increasingly incompatible with what the economy needs. New graduates now account for more than half of the new labor supply, estimates HSBC Holdings Plc. Literature and art are among the most popular majors.
During his reign, Xi has raised the economic status of state-owned enterprises and cracked down on the private sector’s “disorderly capital expansion.” Well, he got more than he wished for. Young people, drawn to the state’s reputation and financial security, now wish its government could offer jobs. Aside from becoming president for life, maybe Xi could also become China’s chief career planning officer?
More from this author and others at Bloomberg Opinion:
• China’s big problem that Xi Jinping can’t solve: Shuli Ren
• Do we owe Gen Z for their Covid misery?: Chris Bryant
• Feeling stuck at a salary of $250,000? Just wait: Alexis Leondis
This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.
Shuli Ren is a columnist for Bloomberg Opinion covering Asian markets. A former investment banker, she was a market reporter at Barron’s. She is a CFA charterholder.
More stories like this are available on bloomberg.com/opinion