China: Shrinking job market destabilising employment opportunities

China’s job market is under pressure due to Covid-19, an ageing population and delayed recovery in the services sector. A recent survey conducted by the China Institute for Employment Research (CIER) at Renmin University of China and job search website Zhaopin, indicate that the number of jobs available per applicant among fresh university graduates in China fell to 0.88 in the fourth quarter of 2021.

In 2021, China aimed at creating more opportunities for the educated and young workforce in view of a decline of jobs to 12.07 million in 2020 from 12.79 million in 2019. China was aiming to create 11 million new urban jobs in 2021 and achieve an unemployment rate of 5.5 per cent.

In view of the estimate of the National Bureau of Statistics (NBS) that about 14 million people would enter the urban workforce in 2021 in China, the trend in job market clearly indicates a gap in demand and creation of jobs in the country.

A Chinese Academy of Social Sciences (CASS) report “Society of China Analysis and Forecast” called for creating enough jobs for young people and new graduates and address structural unemployment to achieve the employment targets of 2022. Explaining the reason for sluggish employment growth it said that repeated “big shocks” due to Covid-19 and natural disasters in labour market led to sharp rise in unemployment in some of the regions of the country. It also pointed towards delayed recovery in services sector like retail, restaurants and hotels which adversely affected China’s efforts to stabilise job growth.

The CIER and Zhaopin report said that the demand by employers for college graduates declined by 11.2 per cent in the fourth quarter of last year compared with the same period in 2020, while the number of applicants rose by 37.8 per cent.  The trend is also confirmed by CASS report, which claims the existence of the trends of “involution” and “lying flat” pointing towards vicious and ineffective competition for limited job opportunities and doing the bare minimum to survive rather than seeking regular jobs among the youths respectively.

A major part of instability in the Chinese job market can also be explained, according to CASS report, in terms of structural unemployment in the country caused by ongoing exodus of foreign firms threatening survival of small, medium and micro enterprises; labour shortages and risks resulting from an increasingly open and capricious global economy; the development of automation and robots; and reverse migration of aged workers to the rural areas remaining un-compensated by the movement of rural youth to urban areas. The report has also added countries declining fertility rate and ageing population as a factor responsible for demand supply mismatch.

Due to the mismatch of supply and demand in the employment market, jobs for college graduates remained under pressure. The situation in job market worsened due to regulatory crackdowns by the government. Some sectors such as the education and tutoring industry that have also traditionally absorbed huge numbers of graduates have lost momentum amid crackdowns.

According to the NBS, the unemployment rate in urban areas in 2021 was 5.1 per cent, compared to 14.3 per cent for people aged between16 to 24 years. In 2021, a record 9.09 million college students graduated in China, with 10.76 million set to graduate in 2022.

The high figure implies “continuous challenge from underemployment and pressure on the job market”.

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