China’s Henan province has unveiled a 100-day plan to “dynamically clear” youth unemployment as concern grows over record levels of joblessness among young adults, Reuters reported on June 1, adding that there were millions more students due to graduate this year. Also according to Reuters, youth unemployment was at a record high nationwide in April. Economists expected youth unemployment to become “increasingly common in coming years as graduates enter the job market”.
Full of joy: the Henan provincial graduates’ employment guide
According to a “Red Star” article, among the sixteen to 24 years-old, the unemployment rate nationwide was at 18.2 percent in April this year, and rose further to 18.4 percent by May. That was four times the overall unemployment rate, and a record high ever since this statistic had been introduced in 2018.
The “Red Star” reporters go further into the provincial “action plan” details. Basically, the universities are assigned with the task to “guide students” into work, mostly by counselling and by finding out about what inhibits them personally, things such as “being in a hesitant rather than a pioneering state of mind” (求稳思维) or being “slow to work” (慢就业), i. e. just not in a hurry – travelling, tutoring or staying with their parents. Studying abroad, too, is counted into “slow to work”.
The universities get the hot potato from the provincial government: they are apparently supposed to “clear” long-term unemployed graduates and graduates from families with a history of unemployment (零就业家庭 ) by August 31.
A CASS professor, Cai Fang (蔡昉), appears to be one of the ecoomists referred to by Reuters. In September 2022, “Interpreter”, a public-domain project run by the Center for Strategic and International Studies, Cai wrote that
According to UN population projections, the share of the relatively young (16-24 years old) in China’s total working-age (16-64 years old) population is expected to increase from 14.8 percent in 2022 to 17.0 percent in 2035. At the ame time, the share of the older population (46-64 years old) will increase from 40.4 percent to 43.1 percent, and the share of the population between 25 and 45 years old will fall from 44.7 percent to 39.9 percent.
根据联合国人口预测,在中国全部16~64岁劳动年龄人口中,相对年轻的16~24岁人口占比,预计从2022年的14.8%提高到2035年的17.0%;与此同时,46~64岁人口占比从40.4%提高到43.1%,25~45岁人口占比从44.7%降低到39.9%
(See figure 1 there.)
While
China no longer faces total employment pressure. However, China will also be in the most dramatic period of development in terms of the progress and application of technology, and of structural change in industry.
[…..] 总体而言中国不再面临就业总量的压力。然而,中国也将处于科技进步与运用,以及产业结构变化最急剧的发展时期。
Cai points to the experience of other countries in the past:
International experience shows that when there is a shock to economic growth, if the policy response
is not timely and appropriate, the shock will leave a “scar” that affects subsequent development, producing a so-called “hysteresis effect” that makes the post-recovery norm in economic growth less favorable than before. Similarly, if the response to cyclical unemployment is not timely, comprehensive, and appropriate, or if it relies only on macroeconomic stimulus without simultaneously addressing the structural and frictional contradictions*) in the labor market, it may leave a “scar” on the employment issue, such that the post-recovery labor market operates with a higher natural rate of unemployment. Although the fundamentals of China’s economy have not changed due to the temporary macroeconomic downturn, the labor market landscape may indeed change as the population enters an era of negative growth
and economic growth faces new challenges.
国际经验表明,在经济增长遭遇周期性冲击的情况下,如果政策应对不及时、不恰当,便会留下影响后续发展的“伤痕”(Scar),产生所谓的“磁滞效应”(Hysteresis),使复苏之后的经济增长处于一个较前更为不利的常态下。与此类似,如果应对周期性失业的举措不及时、不全面和不对症,或者仅仅依靠宏观经济刺激作用,而不能同时解决劳动力市场的结构性和摩擦性矛盾,那么可能在就业问题上会留下“伤痕”,使经济复苏后的劳动力市场在更高的自然失业率下运行。虽然中国经济的基本面未因暂时的宏观经济下行而改变,但是随着人口进入负增长时代,经济增长面临崭新挑战,劳动力市场格局确有可能发生变化。
The whole paper by Cai is available at “Interpret” in both English and Chinese. You can even compare the texts, paragraph-on-paragraph.
What are the goals of Henan’s provnincial government? One objective goal may be to keep the impact from “structural and frictional contradictions” as small as possible. Another goal probably is to satisfy the CPC’s central committee in Beijing, or to have plans to show when having to justify themselves for slow progress in bringing youth unemployment down. Henan is one of the provinces geographically closest to Beijing, and people have probably lost count of the number of visits Xi Jinping and other leading cadres have paid there.
There’s no reason for doom-and-gloom forecasts about China’s economy. There is, however, reason to believe that many young Chinese people will suffer the downsides of the “era-of-high-quality development” that has been heralded by Xi Jinping since October 2017.
That said, no matter if “Chinese-style modernization” or “four modernizations” or what have you, international experience suggests that every developed economy and society has to go through these kinds of unemployment issues.
Then what is “Chinese-style modernization” about? What makes it different from modernization elsewhere Maybe Reuters June-1 article provides an answer:
Heavy-handed tactics to stamp out COVID saw students confined to campuses for long stretches, adding to frustration that led to rare student protests against COVID policies in late 2022.
Industries popular among new graduates in China, such as tech, education, real estate and finance, have all faced regulatory crackdowns in recent years.
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Notes
*) | According to Cai Fang’s paper, the definition would be this: structural unemployment + frictional unemployment = natural unemployment 结构性失业、摩擦性失业(两者合并为自然失业). Structural unemployment (摩擦性失业) is “a form of involuntary unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills” (Wikipedia). Frictional unemployment is “a form of unemployment reflecting the gap between someone voluntarily leaving a job and finding another. As such, it is sometimes called search unemployment, though it also includes gaps in employment when transferring from one job to another” (Wikipedia). |
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