Why so many Chinese graduates cannot find work
AROUND THIS time each year companies visit university campuses in China looking for potential employees. This year the mood is grim. At a job fair in Wuhan a firm was looking to hire management trainees—but it wanted only elite graduates and offered just 1,000 yuan ($140) per month, claimed a post that went viral on social media. At a fair in Jilin most of the advertised positions required advanced degrees, said a soon-to-be graduate online. “Next time don’t bother inviting us.” Another griped that firms are not hiring. The recruitment process is “a lie”, she wrote.
The data paint a similarly bleak picture. The unemployment rate for people aged 16 to 24 in cities reached a record high of 21.3% last June. That was perhaps too embarrassing for the government, so it stopped publishing the data series while it rejigged its calculation to exclude young people seeking jobs while studying. (America, Britain and many other countries include such students when calculating their rates.) The new numbers are lower, but still depressing: in March 15.3% of young people in cities were unemployed. That’s nearly three times the overall jobless rate.
For young graduates the situation is probably even more dire. China does not release an unemployment rate for this cohort. But we combed through data from the country’s decennial census and its statistical yearbooks in order to produce an estimate. By our calculations (including students who are seeking jobs), the unemployment rate for 16- to 24-year-olds with a university education was 25.2% in 2020, the last year for which census data are available. That was 1.8 times the unemployment rate for all young people at the time.
It could be that things have got better since 2020 or that the variables affecting our calculations have changed in unpredictable ways. But it is also possible that things have got worse. To simplify, if we assume that the proportional relationship from 2020 still holds, over a third of young graduates might be unemployed today.
One reason to believe that things are not improving is that graduates as a share of unemployed youth are increasing faster than might be explained by broader demographic trends (see chart 1). Graduates of universities and vocational and technical colleges accounted for 70% of the unemployed young in 2022, up from 9% two decades ago. As a percentage of the youth population, those graduates amounted to 47% in 2020.
China’s sluggish economy is at least partly to blame. Demand for graduates has stagnated. Meanwhile, the supply of them is growing. This year nearly 12m students are expected to graduate from higher-education institutions, an increase of 2% compared with last year. Between 2000 and 2024 the number of Chinese graduates per year grew more than tenfold (see chart 2).
The trend can be traced back to Min Tang, a Chinese economist who proposed expanding enrolment in higher education as a way of dealing with the Asian financial crisis of the late 1990s. Such a policy would postpone young people’s entry into the job market and stimulate the economy by way of education spending, he said. The government adopted his plan, which coincided with societal changes that pushed in the same direction. Children born under China’s one-child policy began to come of age in 1999. With family size limited, parents had more to invest in each child—and more of an incentive to encourage their studies, since these children were expected to provide for their parents in old age.
As demand for slots increased, universities grew in size and number. Laws passed in the early 2000s allowed companies to get in on the action. Privately run institutions, called minban daxue, charge substantially higher fees than public universities and have an incentive to admit ever more students. Enrolment at these schools has ballooned, increasing by 560% since 2004. Back then one in ten students in college or university studied at a minban daxue. Now one in four does (see chart 3).
Minban daxue tend to require lower scores on China’s university-entrance exam, the gaokao, than public institutions. But the acceptance rate at all colleges and universities has been rising. Before 1999 less than a quarter of gaokao-takers were accepted by these institutions. Today most make it in (see chart 4).
The rising number of graduates might not be such a problem if they were learning skills desired by employers. But Chinese companies complain that they cannot find qualified candidates for their open positions. Part of the problem are low-quality minban daxue. Yet the skills mismatch extends across higher education. For example, the number of students studying the humanities is growing even though demand for such graduates is much lower than that for specialists in other fields.
Some students are trying to dodge the tough private-sector job market. The number of people sitting for China’s civil-service exam hit a record high of 2.3m in 2024, a 48% increase year on year. Others are pursuing postgraduate studies. The number of master’s and doctoral students has increased by so much that some campuses have run out of housing.
Unable to find work befitting their degrees, a number of graduates are settling for low-skilled jobs, such as delivering food. Last year a memo from an airport in Wenzhou noted that it had hired architects and engineers to be its groundskeepers and bird-control personnel.
Xiaoguang Li of Xi’an Jiaotong University and Yao Lu of Columbia University have studied underemployment in China. Using national survey data, they found that 25% of workers between the ages of 23 and 35 were overqualified for their job in 2021, up from 21% in 2015. The problem is likely to get worse, says Ms Lu, as graduates facing unemployment have no choice but to accept menial work.
As a result of all this, the returns from pursuing higher education seem to be falling. In a working paper published last year, researchers led by Eric Hanushek of Stanford University found that in China the wage premium associated with higher education dropped from 72% to 34% between 2007 and 2018 for those under the age of 35.
In 2008 an official in the education ministry seemed to admit that the state had made a mistake in expanding college and university enrolment so quickly. But the ministry quickly backtracked. Today the government seems to care more about the size of the education system than the quality of it. Sixty-one new colleges and universities opened in China last year. “Our country has built the largest higher-education system in the world,” boasted the People’s Daily, a party mouthpiece.
In his state-of-the-nation speech last month Li Qiang, the prime minister, at least paid lip service to the idea of making sure more graduates were learning the skills needed in sectors such as advanced manufacturing and elderly care. But many will continue to find that their degree is not a ticket to a good job. Told for years that higher education was a ladder to a better life, their frustrations are growing. ■
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