Jason Lu’s parents never went to university. So when the 25-year-old was accepted into a masters program studying translation in Shanghai, they were “very proud,” he says, hoping that his qualifications would one day lead to a good job. “They are getting older and older and want me to look after them.”
However, due to a “terrible” jobs market, as Lu puts it, he is delaying looking for work and instead applying for scholarships to gain a PhD. In April, youth unemployment in China hit a record high with 20.4% of 16- to 24-year-old jobseekers unable to find work. Compounding matters, some 11.6 million students are set to graduate this month, entering a labor market that looks increasingly bleak. “Most of my classmates are very anxious,” says Lu.
Lu’s experience underscores a twin economic challenge that China is facing—an aging population and young people unable to find work who are expected to care for them. By 2035, around 400 million Chinese people will be aged 60 and over, or some 30% of the population. Last year, deaths outnumbered births for the first time since 1961, further graying the nation’s demographic balance.
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Meanwhile, the ratio of workers to dependents is growing even more unfavorable as an estimated 228 million members of China’s baby boom generation from 1963-72 will retire over the decade. Last year, China had 2.26 working-age people supporting each senior—but that is forecast to drop to 1.25 by 2042. It promises to unleash an unprecedented burden on young people like Lu, who like most of his peers is an only child. “My generation feels a mounting pressure from jobs and our family,” he says.
But while raising retirement ages is a clear—albeit controversial—option to mitigate the problem, providing jobs for Chinese graduates is a more complex and acute challenge. China suffers from a skills mismatch meaning factories have faced worker shortages while graduates are bereft of opportunities that match their proficiency.
“Youth unemployment is a more pressing issue than the aging population,” says Keju Jin, an associate professor at the London School of Economics and author of The New China Playbook. “The 1.1% annual reduction in the labor force doesn’t compare to the fact that the most productive and highly-educated generation cannot find jobs.”
The crisis has led to an outpouring of sardonic grumblings on Chinese social media and the inevitable pushback from officials. In March, the Communist Youth League urged young Chinese to “take off their suits, roll up their sleeves, and go to the farmland,” while Chinese President Xi Jinping weighed in by saying new graduates must “eat bitterness,” a colloquial expression for stoically enduring hardships.
It certainly leaves a sour taste for a Confucian society that invests huge sums in education in the firm belief that it’s the surest path to success. “My parents don’t want me to work in their factory,” says Lu. “I have a master’s degree, they want me to work in an office or as a teacher.”
Youth joblessness reinforces growing discontent over a lack of social mobility in China. Office workers especially in the tech industry are expected to toil for long hours in what’s dubbed “996”—9am to 9pm, six days a week—with no overtime and paltry leave entitlements. It’s contributed to a phenomenon known as “lying flat,” where young workers become so disillusioned by their torpid career advancement that they simply do the bare minimum just to keep getting paid.
Policy blunders have exacerbated the problem. In 2021, the government suddenly banned for-profit tutoring, wiping out a $150 billion industry as well as a key revenue stream that allowed young graduates to support themselves while looking for work more attuned to their chosen careers. A regulatory crackdown on China’s tech industry contributed to tens of thousands of layoffs and a lull in graduate programs.
It’s especially problematic because young people in China account for nearly 20% of consumption, according to a Goldman Sachs analysis, meaning youth joblessness disproportionately impacts growth targets and the nation’s coffers. China’s basic pension fund for urban employees had sufficient reserves to cover 18.5 months of benefits in 2012 but only 11.2 months in 2021. The grim economic outlook has already prompted local governments to slash social services, sparking rare public protests earlier this year in cities such as Wuhan and Dalian.
Proposals to raise retirement ages are seen as inevitable by demographers and policymakers yet remain deeply unpopular among ordinary Chinese (as they do across the globe). “We will conduct careful studies and thorough analysis to roll out the [retirement age] policy prudently in due course,” new Premier Li Qiang told a press conference in March following China’s annual National People’s Congress rubberstamp parliament.
An obvious answer is to channel some of the $3.1 trillion that China holds in foreign exchange reserves back into social programs where it’s most needed. “Of course, there are a lot of vested interests that don’t want their money being pumped into pension funds,” says Jane Golley, an expert on Chinese economics at the Australian National University. “Then it’s a question of government effectiveness—their capacity to actually do what needs to be done.”
Still, tackling youth unemployment remains a trickier issue. The Chinese government is already pivoting towards vocational training and expanding the service sector, which accounts for less than half of jobs in China compared with roughly 80% in Japan and the U.S. “It’s an unfortunate reality that graduates will have to lower their standards and work in sectors that they wouldn’t necessarily have aspired to,” says Golley.
Lu says he’s unable to afford the roughly $1 million rmb [$140,000] he would need to pay for his own four-year doctorate, so if he can’t secure funding, he’ll be forced to take whatever work he can get. “I can find ‘a job,’ but I don’t think it will make me content,” he says. “We want to fulfill our dreams.”
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