China released official statistics showing that the unemployment rate for people aged between 16-24 years in the country had touched a record high of 20.4 per cent in April.
The statistics have been released just one month before another 11.6 million students will graduate from college and vocational schools and all set to enter the job market. China imposed lockdowns under the government's zero-COVID policy and economically damaging than other nations' containment policies, Nancy Qian, Professor of Economics at Northwestern University .
As per the news report, China's economic recovery has lagged behind others. For comparison, the US youth employment rate reached 14.85 per cent at its pandemic peak in 2020 before reducing to 9.57 per cent in 2021, Nepal-based Khabarhub reported. The youth employment rate in the US today stands at 6.5 per cent.
Most of the pandemic-related obstacles to employment in China have been lifted. However, the fundamental conditions for reducing youth employment rate in China is not improving. Research has also showcased that youth unemployment depresses lifetime earnings, as it means that young people are missing important opportunities to develop skills, as per the news report.
The news report has cited many reasons for this. However, one key is the large gap between the "reservation wage" rate that young graduates are ready to accept the salary that firms are willing to pay. This mismatch indicates the extent to which the cost of living has exceeded the growth in salaries.
According to a 2021 survey, jobs for new graduates in big cities like Shanghai and Beijing paid an average of only USD 749 per month. The money is just enough to rent a 269 square feet apartment. The young people can see that a job with such a low starting pay is unlikely to provide the income progression needed to support a family ten years down the line.
Since urban white-collar workers are typically expected to work from 9 am to 9 pm six days a week and a couple who is working and has a a child relies heavily on a nanny. In Shanghai and Beijing, nannies who often have not graduated from high school, earn CNY 6,000 per month on average which is more than recent college graduates.
One might think why fresh graduates do not move to smaller cities with lower living costs. However, the move for Chinese workers is much costlier as the amenities in smaller cities tend to be substantially worse than in large cities, as per the Khabarhub report. Some parts of Chinese first-tier cities feel more affluent than even New York or Tokyo. It is no wonder that majority of the college graduates avoid shifting to these more "affordable" areas. Instead, the graduates depend on their parents to help cover basic costs.
In 2014, a national survey revealed that around 30 per cent of Chinese college graduates continued to live with their parents, as per the news report. While some young workers cannot get by without their parents' support and others are opting not to work as their parents can afford to support them.
China needs not only more jobs but also high-paying jobs, Khabarhub reported. The Chinese economy urgently requires new cohorts of highly productive workers to help sustain a rapidly growing elderly population.
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