What does China’s ‘employment-first strategy’ mean for young jobseekers in an overcrowded labour pool?
- They appear in record numbers every year – fresh college graduates – and it ‘certainly adds pressure to employment’, new Premier Li Qiang says
- Some say Beijing’s bolder employment objective – adding 12 million new jobs in 2023 – contrasts with leadership’s moderate GDP growth target for China
During his first press conference on Monday following the closing ceremony of the National People’s Congress (NPC), Li said Beijing would take multiple steps to stabilise and expand employment and offer more government support in employment services and technical training, especially for young people.
“Employment is the cornerstone of people’s livelihood, but ultimately, the solution to job creation lies in economic growth,” Li said.
Beijing has set a relatively ambitious job-creation target for this year – around 12 million. If achieved, that many new jobs would strongly underpin leadership’s modest economic growth target “around 5 per cent”, as outlined in a government work report last week.
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The bolder employment objective for 2023 – it had usually been set at 11 million over the past five years, excluding 2020 – contrasts with the safe gross domestic product (GDP) growth target, according to Alicia Garcia Herrero, chief economist at Natixis for the Asia-Pacific region.
“The lift of the employment target reflects the government’s concerns about the job market, especially for the young workers,” she said. “However, the ambitious employment target also implies that the current growth target is not ambitious enough, because higher employment creation usually relies on stronger economic growth.”
At his inaugural press conference, Li touched on “various factors” that were considered when setting the GDP growth target around 5 per cent.
“Currently, China’s total economic output already exceeds 120 trillion yuan (US$17.37 trillion), and we also face quite a number of new challenges,” Li said. “So, achieving an ‘around 5 per cent’ growth when dealing with such a high base figure is not an easy task, and it will require redoubled efforts.”
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China targets to boost gross domestic product by ‘around 5%’ in 2023
Garcia said the growth target is simultaneously consistent with the challenges facing the Chinese economy while also accommodating the government’s more diversified objectives beyond economic growth.
And after what happened a year ago – when Beijing projected that GDP growth would be “around 5.5 per cent”, only to watch as its zero-Covid measures pushed actual growth down to 3 per cent for 2022 – it’s anyone’s guess if any perceived loss of face affected their 2023 target.
Beijing “may not want to make such a promise at such an early stage of the year, after last year’s disappointing experience”, Garcia said.
Based on official figures from 2016-19, the number of new urban jobs created per 1 per cent in China’s GDP has been rising slightly as the nation’s economic output grows, but remains around 2 million, and this has exacerbated a years-long urbanisation trend.
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In 2017, Huang Shouzhong, then head of the drafting group of the government work report, said that year’s GDP target was set at 6.5 per cent because “the bottom line of economic growth is to maintain employment”.
“According to the current elasticity coefficient, a 1 per cent increase in GDP could drive 1.9 million to 2 million jobs, and a GDP growth rate of about 6.5 per cent could help achieve the annual employment target of more than 11 million people,” Huang said.
However, this rule has been largely negated by the pandemic’s impact on China’s economy over the past three years, when volatile GDP growth rates met with relatively stable employment figures.
In 2020, China saw 11.86 million new urban jobs added, at a 2.2 per cent growth rate. And in 2021, even with a much higher GDP growth rate of 8.1 per cent, the number of urban jobs increased by just 12.69 million.
Last year, 12.06 million new urban employment were created, meeting the target of “above 11 million” despite the 3 per cent headline GDP growth rate and a weak services sector amid disruptive coronavirus-containment measures.
Meanwhile, a record-high number of college graduates will surely be looking to take advantage of such a burden-free business environment. At an expected 11.58 million, they outnumber last year’s record graduates by 820,000.
“This large number certainly adds pressure to employment,” Premier Li said on Monday. “Going forward, we will further expand channels of employment. And in particular, we will help and support young people to realise their personal values through hard work.”
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The outspoken chairwoman of Gree Electric told the Post that, to cultivate and retain talent, private firms should foster a strong atmosphere of innovation and attach greater importance to training personnel.
“Every year, thousands of college graduates come to Gree through campus recruitment,” Dong said in a written reply.
“[Private enterprises] should also pay attention to improving the sense of belonging and the happiness of employees. The key lies in the fact that the enterprise should cherish its employees, treat them well and allow for them to grow together with the company and stay longer.”
Apart from college graduates, promoting the employment of young skilled workers should not be neglected, Dong said, adding that Gree has established a vocational college to create more educational and employment opportunities.
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Iris Pang, ING’s Greater China chief economist, said the new employment target of 12 million is a bit low if taking the 11.58 million college graduates into account, as it means that some new graduates – along with the existing pool of jobless adults – will not be able to find a job.
“Employment is very important during a recovery, as it is the backbone of consumption growth. Having said that, the government expects more start-ups, which should fill the gap,” Pang said.
In December, China’s surveyed unemployment rate among young people aged between 16 and 24 was 16.7 per cent – still much higher than the 5.5 per cent figure for all age groups, despite declining from the peak of nearly 20 per cent in July 2022.
Nomura economists cautioned in a note last week that the actual labour market conditions could be even worse than what the official figures suggest.
[Beijing] is likely to be pragmatic on what it could achieve on the unemployment rate
The government report also set its target for the full-year survey-based unemployment rate at around 5.5 per cent, showing slightly greater tolerance than last year’s “lower than 5.5 per cent”.
“The higher target for total job creation, and a slightly more flexible target for the unemployment rate, to some extent, signals that Beijing is fully aware of the mounting pressure on China’s labour market, given last year’s economic slowdown, and is likely to be pragmatic on what it could achieve on the unemployment rate,” Nomura’s note said.
Wang Xiaoping, minister of human resources and social security, said earlier this month that a record high 16.62 million people should enter the urban labour force this year.
During a State Council press conference, Wang said the government would roll out solid measures to support business start-ups, the service sector, and micro and small enterprises, while also carrying out large-scale training programmes for key groups.
“Most importantly, we have more than 240 million people with experience in higher education, and the average length of education received by new entrants to the workforce has increased to 14 years.
“Therefore, China’s demographic dividend has not disappeared, and our ‘talent dividend’ is in the making. The driving force for China’s development remains strong and robust.”
