In May, China reported that youth unemployment (among those aged 16 to 24) had reached a record high 20.8 percent, with the high-paying, high-skilled jobs for which university graduates train to become increasingly scarce. From mid-2021, hundreds of thousands positions have been eliminated in the tech sector due to the COVID-19 pandemic, tight capital and antitrust regulations, and the government’s broader “tech crackdown.” And, as the rapidly changing policy environment adds to the uncertainty, cuts are also coming in other highly skilled areas such as financing.
In June, the Chinese internet was flooded with despair photos and messages from new graduates whose only job prospects are in low-paying sectors where there is still some employment growth. Chinese students and their parents are finding it difficult to accept this new economic reality, given the huge sacrifices they have made for higher education. The Chinese education system is one of the most competitive in the world, mainly because college admission is determined by a single standardized national exam, the gaokao. By the time most graduates from good colleges hit the job market, they have spent many years of their youth in intensive study. The pressure to learn the core curriculum—math, science, and literature—is so great that even elementary schools have cut back on non-academic classes like physical education and music.
Meanwhile, the families of these graduates have made sacrifices that are hard to imagine in many other countries. Children as young as ten often do four hours of work a day, requiring constant encouragement, supervision and coercion from parents. All of this is done with the expectation of enjoying future security in a rapidly growing economy—except now economic growth has weakened. Young women tend to suffer more than young men in the labor market. Although Chinese girls getting over boys across all subjects and age groups have long been prevented from entering traditionally male industries such as civil Aviation, which previously had explicit quotas against women. These barriers reflect China’s strong tradition preferring sons. There are 116 boys for every 100 girls between the ages of 15-19, compared to 98 boys for every 100 girls in the United States. Furthermore, women’s employment prospects were further reduced when the government began pushing, in the mid-2010s, to increase fertility. With the birth rate falling to one all time low—setting the stage for huge economic problems down the road—the central government abandoned its one-child policy and many provinces have increased maternity leave above the national minimum.
But this has made employers more reluctant to hire women, with many raising concerns about the cost of future maternity and parenting leave. The assumption is that a man will work as many hours as you need, regardless of how many children he has, while a woman might not.
These cultural norms are clashing with the shrinking of highly skilled jobs. If there are more jobs than workers, employers have no choice but to hire women and provide the necessary support and benefits. But with 11–40 applicants for every opening, China has become a buyer’s market. The immediate result is that young women will be forced to take up even lower paid jobs than similarly qualified men. and some may simply drop out of the workforce altogether. The bleak employment prospects for young women is just one of many signs that the Chinese economy is headed in the wrong direction. For decades, China’s growth has followed the pattern of advanced economies, with rising incomes and education levels, shrinking family sizes and increasing female labor force participation. But now it’s back to lower incomes and educational outcomes (as parents conclude higher education won’t lead to high-paying jobs), larger families, and lower female labor force participation.
The slowdown from annual GDP growth of 10% was inevitable. However, current patterns raise deep concerns about China’s economic outlook, especially given that the government’s policies to address them have not worked. For example, to ease some of the pressure on students and their parents, the government suddenly banned online tutoring in 2021, claiming it would help level the playing field. But all the policy did was drastically reduce the value and number of jobs in technology (and the parts of the financial sector that had invested in it). Worse, families now have to pay even higher prices for private tutoring, lest their child fall behind. And with the broader decline in high-paying jobs, an already hyper-competitive system will become even more extreme, adding to the costs parents must shoulder to secure their children’s financial futures.
Again, these increased costs will hurt girls more than boys. Under the one-child policy, urban parents with daughters invested all their resources in their only child. But now that Chinese parents can have two or more children, many will allocate their limited resources to sons instead of daughters. Certainly, one way to tackle youth unemployment is to encourage new graduates to do so RETURN in rural areas and take up lower paid manual jobs. But for a middle-income country where economic growth is closely linked to urban growth, rural development would represent a setback. It would not raise wages, motivate future generations to pursue a higher education (which is necessary to create higher paying, highly skilled jobs), or provide women with more equal opportunities. To stop a reversal of its economic fortunes, China must address the root of the problem: a lack of high-paying, high-skilled jobs. If the economy is to grow (or at least avoid a contraction) in the long term, the government must create the conditions for job creation in high-productivity sectors and for greater investment in higher education.
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This article originally appeared on Project Syndicate.
