Employment is the foundation of people’s livelihoods and is crucial for economic growth and ensuring stability in society. In recent years, one graduation season after another has been called the “toughest” in recent memory — and 2023’s is no exception. The Ministry of Education has forecast that 11.58 million students will graduate from China’s colleges and universities this year, more than 800,000 more than in 2022, an all-time high. If you add in the nearly 1 million students returning from overseas, the total number of fresh graduates this year could surpass 12.5 million — putting significant pressure on the job market.
The government is working on the problem. A recent meeting of the State Council emphasized the necessity of continuously optimizing employment policies for new graduates, such as increasing policy and financial support for enterprises that hire a large number of them.
So how did we end up in this situation? Many people complain that new university graduates hold expectations that are far higher than their skills, as well as improper views on employment and a tendency to prize job security over other factors. Such accusations are neither fair nor helpful.
At this year’s “Two Sessions,” a member of China’s top political advisory body suggested policymakers avoid wasting energy on trying to find solutions by seeking answers to “false questions.” Once you put the straw man arguments aside, one can see the main difficulty lies with the supply of jobs, not with the supply of universities and students. That’s what needs to be addressed.
We more or less agree. It’s no accident that the problem of university graduate unemployment coincides with pressure on the economy. The problem with fresh graduates is a microcosm for the severe situation in the rest of the domestic job market. There are a myriad of complex, short-, medium- and long-term factors affecting the market, both cyclical and structural. Among them are the cumulative effects of the three-year pandemic shock, the lagging effects of contractionary policies in some industries, cyclical unemployment due to economic downturn, and structural unemployment caused by upgrading the industrial sector.
China’s economy is recovering, but industries such as real estate and tech are facing deep adjustments, and the vitality of micro, small and midsize, companies and small businesses needs to be restored. In general, the economy has not yet fully returned to normal, so it doesn’t have much capacity to take on hoards of new workers. Under such circumstances, some fresh graduates have chosen to postpone their careers by going to graduate school. Still, they remain enthusiastic about taking the civil service exams to get jobs at state-owned enterprises. These are all signs that the job opportunities for new graduates are narrowing. So, their choices are rational from an economic perspective.
To make it easier for new graduates to find jobs, the most pressing issue is to stabilize the economy, which ultimately depends on the market, as well as reform and opening-up. Taking good care of market entities is a matter of course, and avoiding contractionary policies must be done at all costs. Relying on the mutual promotion of market scale and division of labor, the market’s capacity to provide jobs is almost endless, as long as the market is not subject to systemic suppression and distortions.
The private economy employs more than 80% of urban workers. Consequently, the solution to the youth employment problem lies in boosting the confidence of private companies and stabilizing their expectations. This requires governments at all levels to deepen the “delegation, management and service” of reform, expand market access, and create a stable, transparent, fair, competitive, and innovative legal business environment. At present, it is necessary to focus on addressing leftover measures from the pandemic that are unfriendly to businesses.
In addition, reforms in areas such as land, household registration and education should be deepened to enable the free flow of the factors of production, including labor, and allow the market to reasonably allocate resources. Relying on the government to organize a few job fairs or “strengthen employment guidance” has only limited effects.
Emphasizing structural reforms does not mean that other areas of improvement can be ignored. Universities need to explore ways to reform, and students should also take the initiative to adapt. Recently, the Ministry of Education and five others issued the General Higher Education Discipline and Major Adjustment and Optimization Reform Plan, proposing to optimize and adjust about 20% of the disciplines and majors in colleges and universities by 2025. New disciplines and majors that adapt to new technologies, new industries and new business models will be established, while those that are not suitable for economic and social development will be eliminated. This can be seen as higher education’s response to changes in the job market.
It is unacceptable to blame the youth unemployment problem on an “oversupply” of well-educated university students. Internationally, the gross enrollment rate of higher education (the ratio of people receiving higher education to the population of the same age) is used as an indicator for the development level of a country’s higher education system, with more than 50% indicating the popularization stage of higher education. China has just entered this stage. The proportion of China’s population receiving higher education remains significantly lower than that of major developed countries and regions, where finding jobs for university graduates has not become a prominent problem. The “oversupply” theory of graduates is not only untenable but may also lead to absurd solutions, such as drastically cutting back on higher education.
In 2021, there were 240 million people that had received higher education in China. If used poorly, this resource of new graduates will be considered a burden to the job market. But if used well, it will be considered a valuable human resource that will help the country achieve its goal of high quality economic development. To alleviate the difficulties of finding jobs for new graduates, it is necessary to adopt targeted measures through multiple channels. The top priority is to deepen systemic reforms to add lubricant to the job market and not throw sand in the works with contractionary policies.
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