How Bad Is China’s Youth Unemployment…..

With more than one in five young people unable to find jobs, there is hope that China’s stubbornly high youth unemployment rate can be a powerful catalyst for the government to act, says Bloomberg in a July 23 dispatch.

Some excerpts from the report: After all, social stability seems to be what the Communist Party cares about the most. In 2008, during the depth of the Global Financial Crisis, China implemented a 4 trillion-yuan ($558 billion) stimulus plan to create work for an estimated 20 million migrant workers who had been laid off. Job losses and wage disputes had led to a sharp increase in mass protests, particularly along the eastern manufacturing belt. The same pressure point worked again in late 2022.

In early December, China abruptly exited its Covid-Zero policy after university students staged street protests across the country. So this is the billion-dollar question: How bad is China’s youth unemployment really? Is Gen-Z’s frustration once again near boiling point?

By some estimates, the actual jobless rate is a lot higher than the official 21. 3%. China has about 96 million urban dwellers aged between 16 years and 24 years. Only 33 million are looking for jobs. What are the other two-thirds up to?

Around 48 million are enrolled in school, leaving another 16 million unaccounted for. Once we include the so-called NEET — not in education, employment, or training — China’s youth jobless rate can be as high as 46. 5%, according to a back-of-the-envelope calculation by Zhang Dandan, a professor at Peking University. In other words, about 22 million young people — instead of the official 6 million — are sitting idle. It is a scale similar to that of 2008, and something the government must be worried about.

Granted, these youngsters are nothing like the migrant workers back then, who were living hand to mouth and had to move back to their villages once jobless. Many are educated — about two-thirds of the unemployed in the official statistics have university degrees — and their parents have their backs.

Their anxiety is probably not as burning and immediate. In fact, popular phrases such as “chewing on the elderly” and “professional children” have become an integral part of young people’s “lying flat” movement, a cultural undercurrent President Xi Jinping disapproves of. They live with their parents, spend little (and wisely), and are taking their time to figure out what to do next. It is their gap year — with Chinese characteristics.

Faced with a tough job market and dwindling pay, many simply choose to delay their entry into the labor force. Voluntary resignations accounted for 68% of youth unemployment, compared with 37% in the 35 to 59 age cohort, the government’s 2021 labor statistics yearbook shows. Last year, about 20% of university graduates majored in information-technology services and finance, but these sectors accounted for only 6% of total employment, according to Barclays Plc estimates.

These young people’s mentality is very different from that of migrant workers, who were willing to take on any gigs, ranging from manufacturing to construction. We see a lot of “professional children” these days, even in Hong Kong. They are frugal. They take day trips to the city, hang around trendy coffee shops, and pose for Instagram-worthy photos before heading back to the mainland for cheaper hotel stays. They value experience more than shopping.

For now, many are sitting tight and waiting for the job market to improve, and are just glad Covid-Zero lockdowns are over and they can travel again. Nonetheless, 20-plus million idle, educated young people is a potential source of social instability. So far, Beijing has offered few solutions. The government has suggested domestic services, such as elderly care and babysitting, as well as rural jobs.

Xi has repeatedly urged young people to “eat bitterness” — to endure hardship and develop grit. All that has done is lead to young people’s mockery. Even their parents, who are just around 50 years of age and benefited tremendously from China’s three-decade-long economic boom, are not impressed.

China’s elevated youth unemployment can be seen in two ways. On the one hand, because of their social safety net, Gen-Z are probably not as anxious as migrant workers of 2008. They have food, shelter and pocket money from their parents. They are unlikely to create social unrest. On the other hand, they are a lot more picky.

Solving their employment problems requires more creativity than traditional stimulus measures, such as infrastructure spending. As such, investors hoping that soaring youth unemployment will prompt the government to act are most likely to be disappointed. “Chewing on the elderly” is here to stay for the foreseeable future.