Analysis: Record numbers of Chinese graduates enter the worst job market in decades

  • 10.8 million Chinese graduates to enter the labor market in a weak economy
  • The youth unemployment rate is 18.4%, which is three times higher than the general average
  • Graduate jobs a top priority for the government amid stability risks

BEIJING, June 23 (Reuters) – Jenny Bei was among 10 high-performing computer science students from various Chinese universities selected by a Beijing-based internet company for a job after graduation, after four rounds of grueling interviews.

But last month, the company told students to cancel their contract offerings due to the headwinds of COVID-19 and the overall poor economic situation — hurdles facing a record 10.8 million Chinese college graduates this summer.

“I’m worried,” said Bey, who graduated this month and didn’t want to name the company to stay in good standing. “If I can’t find a job, I’m not sure what I will do.”

Register now to get free unlimited access to Reuters.com

The coronavirus restrictions in China have taken their toll on an economy that is already sluggish due to a downturn in the real estate market, geopolitical concerns, and regulatory restrictions on technology, education and other sectors.

A group of graduates larger than Portugal’s total population is about to enter one of China’s worst job markets in decades at a time when youth unemployment is already more than three times that of China’s overall unemployment rate, at a record 18.4%.

There is no text explaining how high youth unemployment will affect Chinese society.

The struggle to find jobs contrasts with what educated young people have come to expect after decades of rapid growth, an embarrassment to a stability-obsessed Chinese Communist Party, especially in a year when President Xi Jinping is expected to secure an unprecedented third term of leadership. .

“The social contract between the government and the people is to stay out of politics and we will ensure that you perform better each year than last,” said Michael Pettis, professor of finance at Peking University.

“So the concern is that once that guarantee is broken, what else should change?”

Top priority

Premier Li Keqiang said stabilizing the labor market for graduates is the government’s top priority. Companies that give internships to recent graduates will receive subsidies, as well as other perks intended to boost employment overall.

Some regional governments have provided cheap loans to graduates who are looking to start their own business. State-backed firms are expected to incur some slack in entry-level private sector jobs.

Rockee Zhang, managing director of Greater China at recruitment firm Randstad, says the entry-level job market in China was even worse than it was during the 2008-2009 global financial crisis, and estimates new jobs are down 20-30% from last year.

“This year is the lowest I’ve seen,” said Zhang, who has been in recruitment for two decades.

Expected salaries are also 6.2% lower, according to Zhilian Zhaopin, another recruiting firm.

China’s Ministry of Human Resources and Social Security and the Ministry of Education did not respond to requests for comment.

The technology sector has been an important source of employment for many Chinese graduates, but this year the industry is reducing its workforce, recruiters say.

The regulatory campaign has prompted several tech giants in China, including Tencent (0700.HK) and Ali Baba (9988.HK) to make massive job cuts. Five sources in the tech industry told Reuters that a total of tens of thousands have lost their jobs in the sector this year.

Job cuts varied across China’s top ten tech companies, but nearly all of them employed at least 10% of their employees, some, including iQIYI (IQ.O) Much more pieces, according to a report published in April by Shanghai-based talent assessment and management consultancy Normstar Group. Read more

The companies did not respond to requests for comment.

In April, a nine-month freeze on licenses for online games over violent content and other issues was lifted, shutting down 14,000 companies in the field. Read more

Private education, another sector that has come under regulatory scrutiny, has also laid off tens of thousands of workers. New Oriental, the largest company in the industry, has announced the layoffs of 60,000 employees.

New hires are slow. The director of human resources at Tencent’s business unit, who asked not to be named because they were not allowed to speak to the media, said they are looking to hire “a few dozen” of new graduates, compared to about 200 a year earlier.

“Internet companies have cut tons of jobs. If they have the financial resources to attract people, they are now choosing more experienced candidates rather than fresh graduates,” said Julia Chu of staffing firm Robert Walters.

Jason Wang, a Beijing headhunter who has worked mostly with tech companies in recent years, is now recruiting primarily for state-backed telecom companies.

“The golden age of hiring periods for Internet companies is over,” said Wang.

In China, being unemployed for some time after graduation usually displeases employers. Many families consider it a humiliation rather than bad luck in the economy.

Official data shows that getting blue-collar jobs after a college degree often elicits rejection, so to avoid long gaps in their resumes, they apply for postgraduate record numbers.

Vicente Yu graduated in 2021 but has been unemployed since losing his job at a media company late last year. His savings will cover another month or two of rent and basic expenses in the southern city of Guangzhou.

“My dad said you should never go home again, and he said he should have kept a dog for me,” said the 21-year-old, who suffers from anxiety and sleep problems.

He spends his nights on social media platforms, where he finds other guys in similar situations.

“I look at all these people like me, who haven’t been able to find a job, and take some solace from that.”

Register now to get free unlimited access to Reuters.com

Additional reporting by Elaine Zhang Wenzhi Yang, Brenda Goh, Sophie Yu, and Beijing Newsroom. Editing by Marius Zaharia and Lincoln Fest

Our criteria: Thomson Reuters Trust Principles.

.