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How China should address the high youth unemployment rate

The government must take a proactive approach to help young job seekers. First, the government could provide funds and subsidies and work with business sectors to provide internships and temporary jobs

By NewsChina Updated Aug.1

In recent months, as China continues to battle seemingly endless waves of Covid-19 outbreaks, the country has been increasingly challenged by rising unemployment, especially among young people. Data released by the National Bureau of Statistics of China shows the unemployment rate for those between 16 and 24 increased from 16 percent in March to 18.2 percent in April and 19.3 percent in June, the highest since the figure was first released in January 2018. It was about 14 percent at the end of 2021.  

During the initial peak of the Covid-19 pandemic in February 2020, China’s surveyed urban unemployment rate surged to 6.2 percent. By the third quarter of 2021, it had dropped to 4.9 percent. Entering 2022, as the resurgence of outbreaks triggered by the more transmissible Omicron variants led to widespread lockdowns and other measures, it drove up the urban unemployment rate in 31 major cities to 6.7 percent in April, the highest level since the index was introduced in 2013, before falling to 5.9 percent and 5.5 percent in May and June. 
The youth labor force appears to be hit harder due to the recent economic difficulties. The youth unemployment rate is usually higher than the overall unemployment rate. In 2018, the youth unemployment rate was about 2 to 2.5 times the overall unemployment rate. In June this year, the ratio is more than three times as high.  

As a large number of students will graduate from universities and vocational schools to enter the job market in July, analysts expect the youth unemployment rate will continue to climb in the latter half of the year. What makes it worse is the record number of college students graduating this year, around 10.76 million.  

Given the uncertainties of China’s economy and lack of work experience, young job seekers face a much more hostile job market. According to a jobs report for college graduates released in April by Zhaopin, China’s leading career development platform, for every job-seeking graduate this year, there is only 0.71 job. By the end of April, only 46.7 percent of graduates said they have secured a job, much lower than the 62.8 percent level a year ago.  

Another major reason pushing the surge in youth unemployment is that compared to older generations, students of rural origin have become detached from agricultural businesses as China urbanized. In the past, young job seekers from rural areas returned to their hometowns to engage in agricultural production if they could not find a job in a city, so they were not counted among the unemployed. But now, this is not an attractive option for many young rural job seekers.  

The government must take a proactive approach to help young job seekers. First, the government could provide funds and subsidies and work with business sectors to provide internships and temporary jobs to help college graduates ride out the difficult period. Second, the government should reform the educational system to better match the curriculum to the demands of the job market. Third, the government needs to increase unemployment benefits and lower the eligibility thresholds for unemployment benefits.  

Securing economic growth is the fundamental solution for stable employment. The government should strengthen its efforts to stabilize the economy through proactive monetary and fiscal policies so the market can provide more job opportunities. More importantly, further reforms should be implemented to release market potential. Approaches to deal with the Covid-19 pandemic have to be improved. Measures to tighten market regulation must be based more on the rule of law and avoid significant negative impacts on growth and employment. All this will inject certainty and boost market confidence in China’s long-term economic prospects.