People look for jobs at a fair on May 20, 2023 in Shanghai, China.
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Record unemployment among China’s youth is partly due to a mismatch between their large companies and available jobs, Goldman Sachs analysts said in a report on Monday.
Graduates of vocational schools studying education and sport are set to rise 20% in 2021 compared to 2018 – but demand for new recruits from the education industry “weakened meaningfully during the same period”, the analysts said.
Regulatory changes wipe out most post-schooling jobs in 2021. Around the same time, policymakers cracked down on internet tech companies like Alibaba and real estate developers.
Goldman analysts said information technology, education and property — industries that are hiring more young workers — were likely to “contribute to the weakening of labor demand.”
Their research found that information technology saw the largest increase in graduates between 2018 and 2021.
Equipment manufacturing, on the other hand, saw the largest increase in demand for workers, but a smaller increase in new graduates, the report showed.
Sugar factories have faced a shortage of workers as young people choose to move to other areas.
Such a mismatch between large companies and available jobs has resulted in China’s overall growth remaining sluggish, even after Covid controls ended late last year. China’s top leaders told a regular meeting in late April that the economy lacked “internal” drive.
The unemployment rate for people aged 16 to 24 hit a record high of 20.4% in April – consistently higher than the overall unemployment rate of around 5% for all people living in Chinese cities.
Uncertainty about future earnings also kept retail sales muted.
With young people accounting for nearly 20% of consumption, the Goldman report said, analysts warned that youth unemployment could remain high in the coming years.
They estimate that there are about 3 million more unemployed 16- to 24-year-olds in China than before the pandemic.
Chinese officials have repeatedly stated that addressing youth unemployment is a priority.
Policymakers are trying to expand vocational training, pointed out Keu Jin, author of “The New China Playbook: Beyond Socialism and Capitalism,” which was published this month.
Another area of opportunity is expanding the service sector, which accounts for less than half the jobs in China, much less than about 80% in Japan and the US, Jin said in a phone interview on Monday.
She said she is more concerned about unemployment – a labor force “unable to deploy” – than China’s aging population.