Will unemployment in China rise further?

For the first time in three years, hundreds of job fairs are being held in China, where job seekers can attend in person. The question now arises whether this development is a sign of the end of the Chinese government’s strict Covid policy as well as a potential unemployment crisis.

Compared to the past several years, the competition between job candidates in China is fierce and employers are taking advantage of this opportunity.

The unemployment rate in China reached 6.2 percent in the first year of the Covid-19 pandemic, and in May last year, the rate fell slightly to 6.1 percent. Now that the restrictions related to Covid are lifted, the situation is expected to improve. But analysts say that the pace of recovery in different sectors of the Chinese economy will not be uniform and therefore the labor market recovery will also be uneven.

Even in the early days of Covid-19, China’s urban youth unemployment rate was 13 percent. The rate saw a further rise in July last year, when one in five 15- to 24-year-olds was unemployed. Speaking about this, researcher and managing director of Asian Labor Review, Kevin Lin, said that if we talk about the last two decades, this is probably the worst period for Chinese youth to find a new job.

For a time, China’s twenty years of unprecedented growth provided countless jobs. But as it shifted its focus from low-cost manufacturing to services, especially high-tech exports, unemployment rose sharply.

The situation worsened when the Chinese government announced a crackdown on the technology, education, entertainment and real estate sectors amid the Covid-19 outbreak, leading to mass layoffs. An example of this is the recent layoff announcements by companies such as Tencent, Alibaba and Weibo, which employ a large number of young people. Similarly, in 2021, a real estate developer laid off 90 percent of its employees when land prices plummeted in the wake of the China Evergrande loan scandal.

In this regard, Zhao Litao, a researcher associated with the National University of Singapore, says that since most of the jobs in China are given in the private sector, the employment situation of young people in the coming period will depend on whether the government Post-Covid policies effectively support the sector and how confident business people are about the current business environment.

Currently, the global economy is slowing down and many experts believe that a period of global recession will also begin later this year. Incidentally, there is also a fear of a decrease in the demand for Chinese exports in the coming time. In addition, the perception that the threat of Covid-19 is not yet completely averted and this situation is also raising doubts about the speed of recovery of the Chinese economy.

Many people believe that China hid its true unemployment rate for decades in the past. He tries to prove this claim by the 40% increase in student enrollments in Chinese universities in a year after the Asian economic crisis in the 1990s. According to statistics, the number of undergraduate students in China’s public universities and colleges will reach 44 million by 2021, compared to only four million at the beginning of this century.

According to Dorothy J. Solinger of the University of California, Chinese youth who enroll in vocational schools instead of college or university do not learn anything special. Dorothy also emphasized on making the education system in China compatible with the jobs on offer.

To encourage youth employment, the Chinese government has announced measures such as training subsidies and apprenticeship schemes. Apart from this, fresh graduates can also seek financial assistance to start their own business. But in a country of 1.4 billion whose priority so far has been the eradication of Covid-19, the results of such measures and reforms will not be immediately visible.

On the other hand, during the period of Covid-19, there is an increased tendency among Chinese youth to pursue low-income jobs, which bring them happiness and satisfaction, instead of pursuing a career in the corporate sector. This situation is called ‘Teng Ping’ in Chinese and ‘Liing Flat’ in English.

Kevin Lynn says that ‘living flat’ reflects a trend of declining job-seeking efforts among young people. They also question whether Chinese youth can afford to adopt this behavior, since China is not a welfare state with a system to support the unemployed.

The rising trend of tang ping also marks the end of an era in which China’s rural dwellers migrated to cities to financially support their families. In contrast, most Chinese youth today want less stress and more leisure. In the long period between the end of education and getting a job, they have changed their priorities.

Zhao Litao says that many young Chinese have either started their own businesses or are working as freelancers. According to him, “this (change) is a reflection of the changing values ​​in Chinese society” and people are now more accepting of delay in starting a job.

Since the shortage of jobs in the private sector in China, a large number of young people are now taking the civil service exam even though they had no desire for government jobs until recently.

But due to the chaos caused by Covid-19, the concept of ‘job security’ associated with government jobs has also disappeared in China. Over the past three years, China’s local governments have spent the bulk of their budgets on efforts to contain the spread of Covid-19, forcing them to take cost-cutting measures, including layoffs.