China’s record-high 20.4% youth unemployment: where did everyone go, and will it get better?
High youth unemployment reveals the structural shifts in China's economic paradigm
China's urban unemployment rate for April was 5.2%, down 0.1% from the previous month, according to data released on May 16 by the National Bureau of Statistics. However, the unemployment rate for the labor force aged 16 to 24 rose to a record high of 20.4% in April from 19.6% in March.
This July, China is expected to welcome its largest class of college graduates ever. Over 11.5 million graduates will find themselves in the toughest job market yet, as the economy slowly recovers from Covid and youth unemployment reaches an all-time high.
Many wonder why youth unemployment keeps rising while the overall unemployment rate stays steady at around 5%. Although COVID and the overall economic slowdown have certainly contributed to some struggles, a closer look at the data reveals a deeper implication of the high youth unemployment.
Hiring picked up moderately in April
In April, overall unemployment remained steady, down 0.1% from the previous month. BigOne Lab's job postings data show similar trends, with job postings on major recruiting platforms remaining roughly unchanged compared to March.
The job market is showing signs of stabilization, but job-hunting conditions for new graduates, especially those seeking high-paying white-collar jobs, have not improved significantly.
According to BigOne Lab's job posting data, the number of job posts for fresh graduates has been decreasing at a faster pace compared to the overall labor market. These jobs include entry-level positions designed specifically for new graduates, as well as management trainee positions that are common in financial services, foreign companies, and enterprises seeking to attract the best talent.
Who are the main groups seeking employment?
While college-educated graduates have received the most media exposure, it is important to note that the main groups of young Chinese seeking employment are those who do not have a college degree and are seeking blue-collar jobs.
According to the seventh national population census, after excluding full-time students, 70% of young job seekers have low or medium educational backgrounds (including elementary, junior high, and high school education).
The COVID-19 pandemic heavily impacted young job seekers with limited professional or technical training. As a result, many of them switched to jobs with low entry barriers that don't require advanced skills, such as delivery, ride-hailing driving, and short-video editing. Despite an overall slowdown in recruitment, job postings related to delivery, live-streaming hosting, new media, and short videos managed to outperform the overall market, according to data from BigOne Lab.
As tourism and domestic consumption pick up, the accommodation and catering industry is expected to rebound and provide employment opportunities for these job seekers.
The accommodation and catering industry has seen a significant increase in hiring in April, with a 44% year-on-year increase in total job postings across major online recruitment platforms. Catering chains such as KFC and Haidilao saw job postings increase by more than 700% and 2400% year-on-year, respectively. Didi and SF Express also increased job openings by 200% and 46%, respectively, indicating an improvement in demand expectations for offline and nationwide logistics activities.
Semiconductors and high-tech companies are experiencing strong demand, but concerns persist over the salary outlook
It's worth noting that not all industries are facing high youth unemployment. Some industries, such as research, manufacturing, and semiconductors, have been able to continue hiring despite Covid lockdowns.
Scientific research and development have expedited the hiring of fresh graduates since the second half of 2022. The positions mainly include junior engineers or researchers for AI, VR/AR, autonomous driving, and quality control.
Semiconductor companies are also competing for talent. On May 12th, Chinese consumer electronics and mobile manufacturer, OPPO, abruptly shut down its chip development subsidiary, ZEKU. This resulted in over 3,000 employees losing their jobs, including many fresh graduates with less than 3 years of experience who had just started their careers.
Many HR managers from semiconductor companies, including Hisilicon and Xiaomi, waited downstairs of Zeku's office to talk to the laid-off employees. According to Shen Wang (深网), a news column by Tencent, dozens of chip design or manufacturing firms, including Zhaoyi Innovation, Guoke Micro, and Huawei, have set up WeChat groups to directly recruit laid-off employees from ZEKU [source].
Even though, employees are expecting a less optimistic salary outlook. According to Shen Wang:
“Some of the candidates for ZEKU, including fresh graduates and those with less than three years of work experience, prefer to enter well-known chip companies. The problem is that large companies do not lack new graduates or employees with less than three years of work experience…and some semiconductors start-ups find it hard to compete for talents because they can’t offer good enough salaries.“
Based on BigOne Lab's job posting data, the average salaries for the semiconductor and IT industry remained strong in April. However, the average salary for the scientific research and development industry has not yet recovered after taking a dive in the second half of 2022.
We have noticed a significant increase in hiring for entry-level and junior positions in the scientific research and development industry since last September, which may drag down the industry's overall average salary. The number of job openings for positions with less than 20,000 CNY/month grew almost 200% month-on-month in September 2022 (vs only 50% for senior positions with more than 20,000 CNY/month salary), but the average salary offered for junior positions has also decreased by approximately 5% month-on-month since the peak in August.
A structural shift in China's economic paradigm
High-tech and semiconductor jobs only account for a small portion of the overall job openings available for young job seekers.
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