Chinese universities must respond to rising graduate unemployment

This year, the number of graduates produced by Chinese universities is expected to hit a record of more than 10 million. But according to social media, the job market those graduates face is tougher than it has been in recent decades. After more than 30 years of high-speed growth – the second highest in the world since 2010 – China’s economy has begun to slow down.

Competition is particularly fierce for the stable jobs offered by the public sector. At the other end of the stability spectrum, the concept of “flexible employment” has been coined to describe the non-traditional graduate occupations that are common in emerging industries, such as online streamer. According to Ministry of Education data, the proportion of graduates going into flexible employment was more than 16 per cent in both 2020 and 2021. These jobs are easier to get, and incumbents can leave any time they want, while employers have more flexibility in the criteria and length of their job offers.

China’s slowdown has occurred as much by design as by accident. The rapid development came with a heavy ecological and environmental cost, and the country has determined to stop pursuing economic growth blindly. Instead, it aims to embrace sustainable, high-quality development. But domestic demand, investment and exports have declined as a result – and, according to Okun’s Law, a slowdown in economic growth reduces demand for labour.

China’s graduate workforce has been expanding at similarly dizzying rates to its economic output. In 1998, universities enrolled 1.1 million students; in 2020, they enrolled 10.7 million: a near 10-fold increase in just two decades. The problem is that those students will soon enter a job market that is already saturated with graduates, further increasing the ratio of supply to demand for graduate labour.

However, it is worth pointing out that although the expansion of the graduate pool is a direct cause of current graduates’ problems, increasing the number of unemployed university graduates by 1 million, it hasn’t actually altered overall unemployment rates because, over the same period, the number of unemployed high school graduates decreased by 1 million. And this increase in the human capital of the unemployed bodes well for China’s ongoing economic development.

Another important structural cause of graduate unemployment is the design of university majors. These often don’t match the constantly changing environment of technological and industrial development. Strong evidence for this lies in the fact that employment rates for graduates of humanities and social sciences are usually lower than those for science and engineering graduates. For universities, it is cheaper to educate a student in humanities and social sciences, so they prioritised enrolment into these subjects, resulting in an oversupply of talent in the professional fields their graduates typically enter.

It is also true that higher graduate unemployment means a lower opportunity cost for students who want to pursue postgraduate studies: the harder it is to get a job, the more attractive it is to continue studying. This has led to a record number of applicants for postgraduate entrance exams.

But universities must not turn their backs on the labour market problems. They have limited ability to directly stimulate a rise in demand for graduate labour, but they should promptly adjust their programmes and the scale of their enrolments to better match current economic demand. Majors relevant to “sunset industries”, with low employment rates and an obvious oversupply of talent, should be withdrawn – or at least downsized. By contrast, there should be more investment and expansion in areas where there is growing demand for talent.

There is no need for students to be too pessimistic about the future. In the short term, the economy may bounce back if the Sino-US trade war eases or if the pandemic is brought under complete control. As the Chinese saying goes, there are always more solutions than difficulties.

A more positive mindset, combined with effective measures, will eventually ease Chinese graduates’ employment predicament.

Wu Keming is associate professor at the School of Educational Science, Hunan Normal University. Ouyang Aoqi, a master’s student at the same school, also contributed to this article.