Still, new businesses in the internet and mobile internet sector have created some 30 million jobs, which, according to Han, indicates that China should be fine. Yet what Han highlights here is both a core feature of China’s employment policy for graduates and a structural problem of the labor market. How does the country create jobs for the 8.34 million students who will graduate from its universities this year? Different regions have been experimenting with different solutions. The province of Jiangsu, for example, is offering students the opportunity to apply for a two-year social service-related job. In Beijing, meanwhile, one key solution for the country is to allow the record number of graduates in 2019 to become self-employed and, ideally, drivers of mass innovation. Described as “big masses create employment (=businesses), ten thousand masses create innovation (大众创业，万众创新)”, the policy was initiated by Premier Li Keqiang in May 2014.
Graduates end up in jobs with salaries that are a far cry from their expectations
The city of Tianjin, by contrast, has decided to focus on offering special support for young graduates between 16 and 35 who have been unemployed for over a year. Among the offerings are guided tours through start-up parks, meetings with potential investors and access to specific seed funding.
The results of these employment initiatives are not easy to assess given the fierce competition in the start-up sector and the frequent race-to-the-bottom in terms of pricing, particularly in industries such as food delivery and transportation. Making a decent living in the medium term might remain a distant dream for many of those who have founded start-ups or are employed in these service industries.
This also reflects changing expectations among the young urban middle class. Many graduates end up in jobs with salaries that are a far cry from their original expectations. According to the online job platform Zhaopin, while a third of graduates are looking for monthly salaries of between 6,000 CNY (US$868) and 7,999 CNY (US$1,158), only 18 percent actually achieve this, adding to the social pressure young graduates face in finding adequate jobs. The problem, it claims, lies in a stark mismatch between what companies are looking for and what the labor market offers. For instance, even though demand for employees in the intermediate services sector increased by 25 per cent, applications from graduates declined 21 per cent.
Growing dissatisfaction has led to the creation of a small youth movement
It is not only that there is a mismatch in terms of sectors, but also in terms of expertise requirements and choice of lifestyle. Take the example of software engineers: Companies like Jingdong or Tencent offer up to 700 CNY per hour, yet still they struggle to find suitably qualified candidates. Meanwhile, the recent public outcry by young IT engineers, following Jack Ma’s call to enjoy working hard from 9am to 9pm six days a week, is a clear indicator that there is also a mismatch in terms of lifestyle expectations.
Growing dissatisfaction and disappointment among graduates have led to the creation of a small, but nevertheless active group of young “leftist” students in Southern China who are committed to improving labor rights and workers’ rights. Beijing is worried that this youth movement could form potential alliances and bring graduate employment perspectives to the top of the agenda. If unemployment levels among middle class graduates grow, the structural problems in the employment market could turn into a larger socio-political crisis that Beijing would struggle to control.
This article is part of the latest issue of the MERICS Economic Indicators, a project monitoring China's economic development.