Tough graduate market prompts government subsidies offer

Beijing is attempting to bolster a weak jobs outlook for its newest crop of graduates – around 10.76 million of them due to graduate by June, 1.67 million more than last year’s record number – with special subsidies being rolled out to improve the prospects of young people.

The Ministry of Education described the employment situation as “grim and complex” during a press conference in December. But the pandemic-hit economy has been further battered by a year-long crackdown on technology industries, including the edtech industry, which hired large numbers of graduates for their online tutoring businesses.

Adding to slowing growth from the ongoing trade tensions between China and the United States, the employment picture is particularly blighted this year.

Notably, this year’s annual government work report to the National People’s Congress (NPC) – China’s rubber stamp parliament – which began its annual session on 5 March, places greater emphasis on employment than last year’s report, including a new section on “maintaining job security”.

It stressed that “over 10 million students are due to graduate from college this year, and we will give our graduates stronger policy support and uninterrupted services to ensure they can find jobs or start businesses”. Last year’s government report to the NPC made no mention of graduates.

The National Development and Reform Commission (NDRC), China’s top economic planning agency, last month published a plan to provide two million “high-quality job opportunities” for college graduates in 2022, and pledged loan support and tax breaks for those who want to start their own businesses.

“Various employment policies will favour college graduates and assistance will be provided more precisely to them,” the NDRC said in an article published on its official WeChat platform in early February.

The NDRC said helping young entrepreneurs set up new businesses would have a multiplier effect on creating jobs. Students would be encouraged to set up enterprises through government-funded incubators and reduced interest loans, and by allowing students to retain university credits when they take time off to set up businesses.

Small businesses employing a certain proportion of new graduates, as well as young jobless people who graduated within the past two years, will be eligible for benefits and reduced interest loans.

Provincial and local authorities have also announced employment plans. The Zhejiang government said last month it would repay the college loans of graduates starting new businesses and would pay living allowances and housing subsidies for top graduates who move there.

The tech cities of Shanghai and Shenzhen have also rolled out similar packages, including for graduates returning from abroad.

Major social issue

Joshua Ka-ho Mok, vice-president of Lingnan University, Hong Kong, said government policies offering more support for new graduates was because “the chances for young people from education to work is a huge issue”.

“The government wants to prevent youth unemployment from becoming a major social issue. It is a quick response by the government to address the COVID impact on graduate employment. The domestic market is no longer determined precisely by the government alone; China’s economy is also driven by the external environment too,” he said, referring to trade tensions.

The government has also expanded the number of postgraduate places, including for those who return from abroad with undergraduate degrees.

“This is another delaying tactic,” noted Mok. The students “proceed with graduate school with some funding support, buying time for the next three years – a masters degree in China is normally three years. It may be another policy adopted by the government to alleviate anxiety or at least reduce the immediate pressure to solve the graduate unemployment issue, but what happens when they join the workforce in a few years?”

Mok added that the rise in young entrepreneurs in cities like Shenzhen was related to the job search experience. It is “not because all of them are very keen but because there are no jobs available in the formal sector so many of them have to go for the informal sector,” he said.

Civil service more popular

Civil service and teaching jobs, which had become less popular in recent years due to lower pay compared to the private sector, are back in demand as salaries have improved. But more importantly, they provide job stability.

The central government and some provincial governments have increased the number of places available to new graduates, but these add just a few thousand new civil service jobs.

A report published in January by Yue Changjun, a professor at the Institute of Economics of Education at Peking University in Beijing, found that in 2021 around 70% of the 3,669 graduates of the top university who signed job contracts last year did so with the public sector.

Overall, the number of people who applied to take the national civil service exam held last November exceeded two million – up 34% on the previous year, with over 1.83 million passing the initial screening. Both figures are new records.

But Todd Maurer, China expert and CEO of Los Angeles-based Edunomix, which analyses links between education and the economy, noted that government is not a major employer in China. “Students may want to find a safer job in terms of job security but there simply aren’t enough openings,” he told University World News.

“The number of new jobs that can be created in government is quite small. There might be a lot of interest and a lot of demand, but the number of individuals actually going to land those jobs is fewer than expected and is not going to be a balancer for the job market at all,” Maurer said.

The proportion choosing freelance work also rose from 7.7% in 2020 to 15.8% in 2021, according to a survey of new graduates published by employment service platform Zhaopin in May 2021, while 12.8% of graduates chose to postpone employment last year – more than double the 6.2% in 2020.

Some opted to take a gap year, but many wanted to focus on preparing for the national civil service exam or to obtain a teaching certificate, according to Zhaopin. Only 57% of the 2021 graduating class chose to work full time after graduation compared with three-quarters of the graduating class in 2020.

Teaching becomes attractive

The attraction of teaching positions in the current climate has led to graduates from elite universities and PhD holders competing for high-school teaching positions in cities such as Beijing, Shanghai and Shenzhen.

The education authority in Hangzhou, capital of eastern Zhejiang province, recently published on its official website a list of 186 new teachers in 25 of its senior high schools. Of these, 162 had masters degrees – many of them from China’s most prestigious universities, as well as well-known universities in the US, France, Hong Kong and Singapore – while four had doctorates.

The list sparked debate on social media with some saying it was a waste of talent.

However, Maurer noted: “It’s a perfectly logical transition for some of these PhDs working in the tech sector to go and teach.”

Qiang Zha, associate professor at York University in Toronto, Canada, and an expert on China’s higher education, said huge graduating cohorts were no longer uncommon in China as it moved to mass higher education. Higher education had become almost universal but too many universities were turning out the same type of graduates with little to distinguish them from each other in a saturated job market.

There needs to be dramatic change to address structural problems in higher education, he said, “but we will have to see whether universities are prepared to make such changes – you see a lot of messages, a lot of policies, a lot of encouragement from the government, but it [change] is not really happening.”

Under a recent government policy more academic masters programmes were being converted to professional programmes. At the same time, a lot of resources are now put into the vocational education sector, he said.

“These efforts are quite significant. We still need to wait and see what kind of impact they can produce but I believe these efforts are positive.”

Impact of pandemic and tech crackdown

The COVID-19 pandemic affected the number of graduates who would have gone abroad for postgraduate studies, adding to pressure for postgraduate places and jobs. Peking University noted in January that the proportion of its new graduates who went to study abroad dropped to 8.17% of the graduating cohort last year compared to 13.34% in 2020.

For Tsinghua University, just 7% of its 2021 graduates went abroad for higher education last year, compared to 9.6% in 2020 and 15.3% in 2019.

Meanwhile, an estimated 4.37 million small businesses shut down in China due to the impact of COVID-19, three times the number of new enterprises created since 2020. Around 80% of jobs in China are in small and medium-sized enterprises, and problems in this sector would dent the national economy as a whole, say economists.

On top of that, last year Beijing launched a sweeping crackdown on its e-commerce industries, followed by another crackdown on the edtech and tutoring sector, banning the provision of holiday and weekend training, ending the establishment of new tuition centres, and preventing companies in the sector from raising capital through initial public offerings.

Seen by some as one of the most severe government crackdowns on a single sector, the government said the intention was to “reduce the burden” on students in primary and middle school who were overloaded with extra private classes.

However, it had a huge impact on publicly listed Chinese companies engaged in private training, leading to massive outlet closures and lay-offs of teachers, slamming the door on new graduates previously hired in large numbers.

“We’re looking at 100,000-120,000 jobs lost just in edtech,” said Maurer, pointing to New Oriental, one of the largest and most popular tutoring companies in China, which announced last month it had shed 60,000 jobs.

Maurer said: “New Oriental is at the top of the pyramid, but there are lots of other companies that will be closed … The sector employed hundreds of thousands of people, many of them full time, some of them part time. And you’ve already seen pretty significant layoffs. That, in addition to another 10 million graduates coming out in spring, is going to create a lot of pressure on the [employment] market and it is very likely there will be more layoffs rolling out this spring.

“The timing is going to be very unfortunate for a lot of graduates coming out, there’s no doubt about that.”

Ministry of Education figures released last month indicated the number of physical out-of-school tutoring classrooms had dropped by 92% since the crackdown. The number of companies providing offline tutoring services plummeted to 9,728 by the end of February compared with about 124,000 before the crackdown, according to the ministry’s Off-Campus Education and Training Department, created last year to oversee the sector.

At the same time, the number of companies offering online courses fell by 87% to 34 companies from 263 companies before the crackdown.

Pivot to high tech

But Maurer noted some high-tech companies are still expanding as part of the government’s emphasis on certain technology sectors in its 14th Five-Year Plan, which includes areas such as semiconductors, artificial intelligence, robotics, quantum computing and space technologies.

“Some of these big tech companies that are still hiring will probably continue hiring because they are extremely healthy,” said Maurer.

“China’s tech leaders don’t have a problem hiring more graduates, but they’re not going to make up for the shortfall that we’re seeing in other areas.”

Despite a crackdown on its parent group Alibaba, e-commerce giant Ant Group launched its campus recruitment programme with great fanfare this month to fill entry-level posts in cities such as Beijing, Shanghai, Shenzhen and Hangzhou, but eagle-eyed students noted it was mainly for students due to graduate next year in high technology fields.

Nonetheless, the 150 positions in its recruitment drive were up on the 113 jobs in the same programme last year and this was regarded as a positive sign.

In 2019, for example, Huawei recruited about 400 graduates from Peking University and Tsinghua University, the country’s two top universities, alone. But in 2021, graduates of these top universities were more likely to apply to the civil service or state-owned enterprises.

Maurer noted: “For those able to use their skills to pivot to some of these new areas – mostly the harder science areas like biotechnology, cloud computing, semiconductors and other areas of priority – there are going to be a lot of job openings.”

But, he added: “The question will be how transferable are a lot of skills for these graduates. It’s not going to be an easy environment at all for anyone working in China, new college graduates particularly.”