People look for work at a fair in Shanghai, China, May 20, 2023.
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Record unemployment among China’s youth stems in part from a mismatch between their specializations and available jobs, Goldman Sachs analysts said in a report Monday.
Vocational school graduates studying education and sport rose 20% in 2021 from 2018 – but demand for new education sector hires ‘has weakened significantly over the same period’ , analysts said.
Regulatory changes have eliminated after-school education jobs in 2021. Around the same time, policymakers have cracked down on internet technology companies such as Alibaba and property developers.
This “likely contributed to weaker labor demand” in information technology, education and real estate – sectors that also tend to hire more young workers, said Goldman analysts.
Their research found that information technology experienced one of the highest increases in graduates between 2018 and 2021.
On the other hand, equipment manufacturing saw the biggest increase in demand for workers, but few new graduates, according to the report.
Chinese factories have faced labor shortages as young people choose to pursue other fields.
Such a mismatch between majors and available jobs comes as China’s overall growth has remained sluggish, even after Covid controls ended late last year. China’s top leaders said at a regular meeting in late April that the economy lacked “internal” momentum.
The unemployment rate for people aged 16 to 24 hit a record high of 20.4% in April, remaining consistently above the overall unemployment rate of nearly 5% for everyone living in Chinese cities.
Uncertainty about future earnings also dampened retail sales.
Young people account for almost 20% of consumption, according to the Goldman report, with analysts warning that youth unemployment could remain high in the years to come.
They estimate that China has about 3 million unemployed people over the age of 16 to 24 compared to before the pandemic.
Potential solutions
The Chinese authorities have repeatedly declared that the fight against youth unemployment is a priority.
Policymakers are trying to expand vocational training, pointed out Keyu Jin, author of “The New China Playbook: Beyond Socialism and Capitalism,” which was released this month.
Another area of opportunity is to develop the service sector, which accounts for just under half of China’s jobs, far less than the roughly 80% in Japan and the United States, Jin said in an interview. telephone on Monday.
She said she was more concerned about unemployment – an “undeployable” workforce – than China’s aging population.
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