China unemployment: Beijing’s regulatory crackdowns pose yet another hurdle for young urban jobseekers

15.3 per cent unemployment rate among 16- to 24-year-olds in Chinese cities is three times as high as the overall national average of 5.1 per cent
High jobless rate in the young workforce seen persisting as millions of fresh grads vie for employment, while one popular sector – tutoring – has basically been wiped out

China jobs

Frank Tangin Beijing

Published: 11:00am, 16 Sep 2021

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Roughly one out of every seven young urban workers in China remains unemployed, as Beijing’s regulatory crackdowns on key industries are adding further pressure on the nation’s weak jobs sector amid more signs of a broad economic slowdown, according to the latest economic data.

The official figures indicate that the surveyed jobless rate for workers aged 16 to 24 – which includes most high school and college graduates – hit 15.3 per cent in August, the National Bureau of Statistics said on Wednesday in its monthly update.

Although last month’s rate was an improvement from 16.2 per cent in July, and was 0.2 percentage points lower than in June’s graduation season, it marked an increase from the 13.1 per cent seen in August 2019, pre-coronavirus.

And the 15.3 per cent unemployment rate among the nation’s young workers is particularly glaring against the 4.3 per cent jobless rate for workers in the 25-59 age group, while being exactly three times as high as the overall national average of 5.1 per cent.

In the past several years, 16- to 24-year-olds have seen their employment rate consistently stay above 10 per cent. And Ding Shuang, chief Greater China economist at Standard Chartered Bank, expects the high jobless rate in the young workforce to continue as millions of fresh graduates will enter the job market every year.

“There is also a structural imbalance – many college graduates are reluctant to take some jobs or go to certain regions, and they can afford to wait for one year,” he said, referring to the large disparity between the young group and the national average.

But looking forward, he said, the situation could be further strained by Beijing’s crackdown on the after-school tutoring sector, which traditionally employs tens of thousands of graduates.

And economists say the overall job outlook has also been shrouded by both the tutoring crackdown and by Beijing’s recent regulations aimed at Big Tech. These moves, they say, have already resulted in job losses, while also hurting recruitment.

Meanwhile, sporadic outbreaks of the coronavirus Delta variant across China are also complicating the job situation, with a particularly outsized impact on service sectors and small businesses, according to analysts.

Beijing’s policymakers are putting a high priority on stabilising the nation’s job market, given its social-stability implications. China’s fresh college graduates, totalling 9.09 million this year; its nearly 300-million-strong population of migrant workers; and former soldiers are widely regarded as three of the main groups being targeted for additional support by policymakers.

The world’s second-largest economy aims to create 55 million urban jobs by 2025, including 11 million this year, according to the five-year plan (2021-2025) released last month by the State Council, China’s cabinet. A total of 9.38 million new urban jobs were created in the year’s first eight months – 85.3 per cent of the annual target.

However, those goals are facing headwinds. For instance, retail sales growth in August slowed to 2.5 per cent – a sharp decline from 8.5 per cent a month earlier – as the country adopted strict control measures to fight outbreaks of the Delta variant.

National economic growth is widely expected to fall from the 7.9 per cent increase in the second quarter, as that year-over-year figure was skewed upwards by the low comparison base.

Why China cracked down on education and upended a US$70 billion tutoring industry

Some private tutoring companies have already started to lay off workers, many of whom are in their twenties, after Beijing clamped down on the US$70 billion industry, saying it “violated the laws of education” and imposed a heavy burden on families.

Fu Linghui, spokesman for the statistics bureau, said that China’s job market was “overall stable” this year, and that more jobs could be created as the domestic service sector improves.

The overall surveyed urban-unemployment rate of 5.1 per cent in August was unchanged from July, but below the government’s annual control target of 5.5 per cent, official data showed.

However, that official rate is seen by some analysts as unreliable, as China’s tens of millions of self-employed business owners and nearly 300 million migrant workers are not included.

“Of course, the pressure and structural problems will exist, which means a continuation of employment-priority policies,” Fu said.