2024-03-26 11:17:41
The Communist Party of China has returned to publishing the unemployment figures for the country’s youth, and now they indicate a rate of 15.3% among those aged 16-24. This, after last June they reached a negative peak of 21%, leading the administration to take a radical step and stop the periodical publications. The Communist Party apparently wanted to hide the serious problem that creates a difficult challenge for the local economy.
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Shay Cesler, global markets analyst at Bank Hapoalim’s research unit, explains: “We see that in the rural areas of China the unemployment figures among young people reached 40% in the past, a significantly higher percentage compared to the general population, where the figures are around 5%.”
Thus, in China they actually changed the nature of the reporting in a way that would reflect less of the depth of the problem. The Chinese Central Bureau of Statistics explained that the publications now do not include students in schools, which retrospectively reduces the number of unemployed people appearing in the data. From the data published so far, it appears that the employment of young people has deteriorated in recent years after the market contracted and employers avoided new recruitments.
The academics can’t find work
The methodological change in the nature of the publications creates another problem. These are data that are now difficult to compare with data in other countries, since the practice that has now started in China is not common when estimating the youth unemployment figures in the world.
The unemployment figures published by the Communist Party in the country last year showed the dismal situation of the Chinese youth, and the difficulty of the country to return to growth after the corona closures from which it emerged at the end of 2022. The situation is becoming even more complicated: China’s policy makers predict that the ability of Chinese university graduates to find work is becoming more difficult today.
In the coming year, approximately 12 million graduates are expected to graduate in China – this is a record number and an increase of almost 2% from the previous year. This figure is also expected to make it even more difficult for young people to find a job. In the last 20 years, the number of graduates has quadrupled.
Growth in the country is faltering
The high unemployment numbers can cloud the growth capacity of the second largest economy in the world. The Chinese economy grew by 5.2% the previous year, and at the annual party conference the growth target set for 2024 is 5% – a target that now seems difficult to achieve. For comparison, in the decade before the corona, the average annual growth in China was more than 7%.
Among the reasons for the shuffling, it is possible to mention measures taken by the Communist Party that damaged the core areas of the economy and burdened regulation. Sectors such as technology, online education and even real estate were dominated by young people, but are now suffering from crises, showing poor performance and struggling to rise.
Chinese President Xi Jinping / Photo: Associated Press, Leah Millis
Chesler explains that the slowdown in the Chinese economy has resulted in the creation of fewer jobs and less work for each worker. According to him, “Government aid and the party’s infusion of funds did not help the young job market to return to functioning. Also, the lowering of the central bank’s interest rate and the increase in the reserve ratio that were supposed to stimulate the Chinese economy still do not show a substantial impact on the Chinese market.”
Unemployment may further shrink the population
Youth unemployment has additional effects on the economy. Research institutes warn that the inability of young people to find work will also affect the number of children they will have in the future. China’s population is already shrinking, and in 2023 it will be 2 million less.
China’s attempt to stabilize the economy in the form of economic incentives is currently focused on sectors that can significantly increase economic growth, i.e. – the manufacturing industries in the country. “The government’s incentives so far have focused on the industrial sector, a sector that is usually characterized by low wages. If we add this to the great erosion of Chinese employment and the fact that many Chinese work in a profession that does not match their education, we understand the high unemployment rate among young people,” says Cesler.
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