CHINA: Graduate unemployment on the rise

Ministry of Education statistics indicate more than 6 million students will graduate in China this year whereas in 2002, the total number comprised only 1.45 million. But the employment rate for graduates last year was less than 70% and the rising number seeking jobs is challenging the government at a time when the current economic crisis will surely exacerbate the problem. It is likely close to 2 million graduates will not find work - many of whom are postgraduates, even doctoral graduates.

Several factors are responsible for the dire situation facing graduates and the massive expansion of enrolments since 1999 is one issue. At the end of the last century, China's exports were negatively influenced by the Asian financial crisis that began in 1997. China's economic growth declined sharply while at the same time domestic demand was not high enough to maintain the momentum of economic growth.

To increase domestic demand, the central government reduced interest rates dramatically for saving accounts but the measure was not effective in getting people to increase their spending. In 1999, the government stimulated domestic demand by increasing higher education enrolments.

By 2008, new enrolments in universities had risen by about 6 million, with close to 24 million students in total. Although student numbers increased, this had not been carefully matched with student employment prospects.

Before 1978, China had a centrally planned economic system but that year, a market economy was introduced and the country opened its doors to foreign investment. Higher education, however, did not take account of this market-oriented policy and, even today, new enrolments at almost all levels are first arranged by universities and colleges and then approved by governments at various levels, often without a survey of market needs.

With demands in the job market changing constantly, the tension created by the gap between the supply of graduates and the demand of employers has intensified. Consequently, too many graduates have majored in accounting, Chinese language and literature, law and computer science, whereas jobs in these fields are limited. At the same time, many companies cannot find qualified employees working in specific technical fields.

The major economic crisis that originated in the US in 2008 also affects China. Amid the global financial crisis, China's economy has been declining at a surprising speed since last summer and tens of thousands of foreign-invested companies in the eastern provinces, such as Guangdong and Zhejiang, collapsed with millions of people losing their jobs.

Employment in China has plummeted. Fewer positions are available for graduates and graduate employment will be limited in 2009 and for the next few years. At a job fair held by Donghua University, more than 30,000 graduates competed for 1,700 positions provided by foreign firms.

The Chinese government has taken some measures to try to solve the crisis and it hopes injecting huge investment into the economy will create jobs and relieve much of the pressure. But some experts predict that building infrastructure will only provide manual jobs for ordinary workers and will not benefit college graduates.

Another measure is to boost postgraduate enrolments. The Education Ministry plans to expand enrolments of masters students by 5% and doctoral students by 1.7%. Given the decline in jobs, many graduates will choose to study further and this year almost 1.25 million first degree-holders will be taking the postgraduate entrance examinations.

Yet expanding postgraduate enrolments cannot solve the problem of graduate unemployment as it can only offer some relief or postpone the current employment pressure. Indeed, in recent years, employment of masters degree graduates has become problematic.

Diverting graduates to rural areas is a third measure. But a vast gap exists between urban and rural areas in terms of developmental level, opportunities and living conditions. Thus, most graduates prefer to work in cities.

To encourage them to go to the countryside, the government has come up with policies such as preferential treatment when graduates (after two years service) apply to become government officials, or extra points are added to their scores in examinations for graduate study. But these policies are not attractive given the low salaries graduates can earn in country areas.

The Education Ministry has recently been calling for the whole society, including overseas Chinese, to contribute ideas to improve education overall. Promoting creative and vocational education has been raised as a way of providing new graduates with creative education and job skills to meet the needs of the market and face the challenges of a changing world in the decades to come.

Perhaps this approach constitutes a more fundamental strategy that will eventually solve the graduate employment problem although the impact is likely to take many years to become apparent.

* Mucun Zhou is a doctoral candidate in the department of philosophy at Peking University and currently a visiting student at the University of Maryland. Jing Lin is a professor of education at Maryland.

* This is an edited version of an article, titled "Chinese Graduates' Employment: The impact of the financial crisis", from the Spring 2009 edition of the journal International Higher Education, published by the Center for International Higher Education at Boston College, and is reprinted with permission.