China’s rising unemployment rate is forcing millions of college graduates into low-paying jobs or dependence on their parents, creating a new “rotten-tail kids” working class. A record number of graduates face a labor market weakened by COVID-19 and regulatory crackdowns on finance, tech, and education.
Youth unemployment hit a record high of 21.3% in June 2023–and continues, prompting officials to suspend data reporting for reassessment. Despite government efforts, the jobless rate remains high, reaching 17.1% in July this year.
Many graduates in China find that their degrees no longer guarantee upward mobility or better job prospects. This leads some to reconsider their career paths or further their education in hopes of better opportunities. However, even graduates with advanced degrees are struggling to find jobs.
The competitive academic environment has not translated into job security. China has expanded university enrollment since 1999. But the supply of graduates continues to outpace job availability.
The imbalance is expected to persist until 2037. This may reduce the surplus of graduates. China’s growing youth unemployment crisis gives rise to a new working class known as “rotten-tail kids.” Despite government efforts to boost job creation, college graduates are increasingly pessimistic about their prospects.
Youth unemployment spiked to a high in July 2024. Many young graduates are forced to accept low-paying jobs in a weakened economy. Hopeful job seekers crowded the venue at a job fair in Liberation Square, Shijiazhuang, Hebei province.
This highlights the intense competition in the job market. “Graduating from college no longer guarantees a good job,” said one attendee at the job fair. “Many of us are settling for positions far below our qualifications.”
The uncertain outlook persists despite various government initiatives to improve the job market.
Youth job market challenges
Reporting by Ryan Woo and Ethan Wang, with additional inputs from Qiaoyi Li and Laurie Chen, reflects a growing concern among China’s youth. China’s unemployment crisis underscores the broader challenges facing the country’s economic model.
A combination of factors now threatens China’s long-term macroeconomic stability. These factors are exacerbating trade tensions for China abroad. An increasing number of fresh college graduates are joining the gig economy by taking low-skilled jobs such as delivering food as they struggle to find jobs commensurate with their degrees.
The number of people under 25 who applied for manual jobs in the first quarter of 2024 surged 165% compared with the same period in 2019. A memo from an airport in Wenzhou City indicated that the airport had hired architects and engineers as ground managers and bird controllers. Since December 2022, there have been over ten protests at Carrefour stores nationwide due to store closures and unpaid wages.
Alibaba, China’s e-commerce giant, cut 20,000 jobs, or 12.8% of the total employment, in the 2023 fiscal year, following a 7% cut in the previous year. China’s official unemployment rate in urban areas has remained flat at around 5% for decades. However, it has never significantly reflected reality when economic gloom weighs on manufacturing and service industries.
Since its stringent COVID-19 restrictions ended, China’s economy has struggled to rebound amid insufficient demand, excess savings, debt crises, and falling property prices and investments. Without significant fiscal or monetary stimulus, China’s disappointing economic recovery continues to depress employment through its impact on its “three engines” of growth – investment, exports, and consumption. China’s job market struggles are deeply embedded in a state capitalism system driven by mercantile national strategies for export expansion and trade surpluses.
China has relied on exports to boost its economy amid weak domestic demand. However, the country’s foreign trade faces significant headwinds due to supply chain disruptions, the US-China decoupling process, and high tariffs levied by considerable trading partners, including the United States and the European Union. The slowdown in exports has a direct impact on manufacturing jobs.
Lower demand for Chinese goods abroad is leading to reductions in workforce and production volumes in export-oriented industries. China’s exports fell for the first time since 2016 as global demand for Chinese-made goods slowed. To address these challenges, China must implement comprehensive reforms that balance domestic consumption with production and adopt measures to mitigate the impact of global trade tensions.
Providing targeted support to affected industries and workers is crucial. Without such reforms, the pressures from prolonged economic stagnation, loss of trade competitiveness, and social discontent cannot stay contained much longer.
