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WorldAsiaYouth unemployment a new blow for the Chinese economy!

Youth unemployment a new blow for the Chinese economy!

Unemployment among young graduates seeking jobs in China has hit an all-time high, with the rate among young people aged 16-24 hitting a record high of 20.4% in April, about four times the rate wider unemployment of all. working people live in Chinese cities, which reached 5.2% in April, according to data from the National Bureau of Statistics of China.

Although the government ended the “zero Covid” policy last December, the youth unemployment rate remained high, reaching the highest level since China began reporting the statistic in 2018, as one young person in five is now unemployed.

According to a report recently released by Goldman Sachs Bank, the record unemployment rate among Chinese youth stems in part from a mismatch between their specializations and available jobs, as the report indicates that graduates from vocational schools who study specializations such as education and sport increased by 20% percent in 2021 compared to 2021. 2018, while demand for new appointments from the education sector decreased significantly over the same period, and the major in technology of information has seen one of the largest increases in the number of graduates between 2018 and 2021.

The report by US investment bank Goldman Sachs suggests that China’s youth unemployment rate will peak in the summer months (July and August) with the influx of new university graduates, indicating that the return of young to work will help China in economic recovery because it will restore the consumption power of young people, which is a demographic category A that generally accounts for about 20% of consumption in China.

A classic case of misallocation of resources

Tariq Al-Rifai, CEO of the Quorum Center for Strategic Studies in London, views China’s youth unemployment problem as a classic case of resource misallocation.

Al-Rifai added in his interview with “Sky News Arabia Economy”: “When China launched the industrialization boom in the 80s and 90s of the last century, it encouraged massive migration from rural areas to cities. looking for better paying jobs, as well as looking for a better life, and this migration has been successful, well at the time of China’s growth, as we used to see the rapid growth of the Chinese economy during this period until the beginning of the year 2000.

An imbalance between the labor market and the number of university graduates

Since 2011 the Chinese economy started to experience a slowdown in growth, then we saw a recovery in growth after the Corona pandemic, we saw a recovery in growth, but growth is now much slower than it wasn’t, which has resulted in an imbalance between the labor market, the number of university graduates, as well as the people who don’t. They are still moving to cities in search of work, according to Al-Rifai, who confirmed that this problem will increase, especially as the Chinese economy is in a state of change, as China was a factory for the world because of its resources and cheap labor, but that reality has changed now.

The CEO of the Corum Center for Strategic Studies says that some companies in China have started to move to countries where manufacturing has become cheap, such as Vietnam and India, which means that the Chinese economy has become technologically advanced and has jobs with greater efficiency, and so it takes time to adapt to these variables.

Support for qualifying training

Last April, China’s State Council announced a 15-pronged plan to optimally match jobs with young researchers. These include supporting vocational training, committing to one-time expansion of employment in state-owned enterprises, and supporting the entrepreneurial aspirations of university graduates and migrants. workers.

6 reasons for the worsening unemployment rate

In turn, economist Dr. Abdullah Al-Shennawy points out in his interview with “Sky News Arabia Economy” several factors that account for the reasons for the exacerbation of the unemployment rate in China, namely: China has cracked down on its education and technology industry, leading to thousands losing their jobs and suffering businesses and investors. Tighter surveillance – during the pandemic – has made fears of increased government interference in the private sector, prompting companies to limit hiring. Industries that attract educated young people are declining, though the number of university graduates is rising, with 11.6 million university students expected to graduate in June, an increase of about 820,000 from last year . The growing gap between the rate of pay young graduates are willing to accept and the rate companies are willing to pay it is that measure that reflects the mismatch in which the cost of living has exceeded the rate of growth in wages. Individuals’ unstable expectations of the Chinese economy, leading companies to refrain from hiring new employees, as the Chinese economy is expected to strengthen in the coming months, but the recovery will remain weak until to make consumers feel full of confidence to make big-ticket purchases, which will drive more businesses to do with more jobs. Insufficient development of the service sector in China, which has always been a magnet for youth employment. An explanation of which we find in the high rate of frictional unemployment, which arises when individuals take up employment and seek new job opportunities, which is generally more frequent among young university graduates and who do not haven’t found a job yet. Medium and long-term structural imbalance in the Chinese economy which explains the current imbalance between labor supply and demand.

Corona restrictions have limited travel and overwhelmed small businesses

For his part, economist Ali Hamoudi said in his interview with Sky News Arabia Economy: “High youth unemployment has been a problem in the Chinese economy for several years, and it has been exacerbated by strict health restrictions accordingly. of the Corona pandemic which has limited travel, exhausted small businesses and hurt them.” damage to consumer confidence.

However, the Chinese government has introduced a series of policies aimed at boosting youth employment, including subsidies for small and medium-sized enterprises that hire university graduates, as state-owned enterprises have been instructed to create more jobs for those who have just started looking for work, according to Hamoudi.

Hamoudi explains that one of the reasons for the unprecedented increase in youth unemployment in China is the lack of compatibility between the jobs sought by university graduates and the jobs available in the labor market, as young university graduates higher education are looking for jobs in the fields of technology, education, and medicine, but these fields are ones that have been developing slowly in China in recent years.

Youth unemployment threatens social stability

Economist Hamoudi explains that “youth unemployment is a problem for all economies because it costs the state to find them job opportunities and benefits, but the bigger problem that goes beyond of the issue of affecting economic growth is manifested in the threat to social stability, and the state must spend in new sectors that provide employment for young people in order to prevent this stability from being threatened. Especially since we noticed the protests that were led by young people against the closures caused by the Corona pandemic at the end of the last This is perhaps the greatest danger that China faces for this group.

The economist, Dr. El-Shennawy, offers a set of measures that the Chinese government can take to reduce unemployment, namely: Adopt recovery policies and strengthen support for young people in their job search, implement the necessary policies to improve employment opportunities and labor market stability and implement public works programs. Provide stipends to graduates, maximize human capital accumulation and promote vocational training to guide young people in their career plans. Build a “buffer zone” for employment to ensure that short-term unemployment problems do not turn into long-term structural problems. This is done by providing information for career counseling and labor market adjustment programs.

As for the package of procedures that must be followed by job seekers, they are as follows, according to Dr. Al-Shennawy: Graduates should show some flexibility in their choice of professions to allow efficient allocation of human capital, due to their share of employment in government institutions. Reduce expectations for a graduate’s first job. Spend more time on long-term career planning.

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Arab Desk
Arab Desk
The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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