CHINA: Guidelines to ease graduate unemployment

China's highest administrative authority, the State Council chaired by Premier Wen Jiabao (pictured), has said cities should remove residency restrictions on graduates to reduce unemployment. But the improving of graduate mobility will not apply to the most sought-after cities.

In the municipalities of Beijing, Shanghai, Tianjin and Chongqing the coveted hukou, or permanent residence permit, will continue to be hard to get, according to State Council guidelines made public last week.

"All cities except municipalities should remove restrictions of hukou settlement for college graduates and should permit their settlement where they work or where they start their own businesses," the State Council said, referring to the rule that a student's hukou reverts to the town of origin after graduation.

Graduates will also be encouraged to seek jobs in less-developed regions or to become self-employed, with government loans and preferential tax policies for graduates who wish to set up small businesses, according to the State Council. But only around one in 100 graduates start their own businesses, according to recent statistics.

"This is the time of year when college students are looking for jobs and this announcement sends a reminder to middle-sized cities," said Cindy Fan, a professor in the department of geography at the University of California in Los Angeles (UCLA), and author of China on the Move.

Statistics from the Ministry of Education show that a record 6.6 million students will graduate this year, up from 6.1 million in 2009 - when 1.5 million graduates were without work - and 300,000 more graduates than last year. China's Human Resources Ministry said more than 600,000 graduates from last year still do not have a job.

"There is a mismatch between where the college graduates are and where they want to go for jobs," Fan said. "They want to be in Beijing and Shanghai. But there are many smaller cities and cities away from the coast where there is a lot of demand and maybe graduates are not going there."

While overall employment is low among migrant workers and rural workers, the huge expansion in university places in recent years means "there is still some bumpiness in the system," said Albert Park, a professor in the economy of China at Oxford University.

"Anecdotally, college graduates are still reporting that it is difficult to find jobs. But college graduates also have very high expectations in China and it could be that they are not getting the jobs they want at the salary they want so they are holding out for a better job," Park said.

Although the residence permit system devised in the Mao Zedong era as a means of social control is not as inflexible as in previous decades, "it is still administratively burdensome," Park told University World News. "As a whole hukous are being relaxed in particular for college graduates by cities who do not feel as strictly about keeping out college graduates as they do about rural workers."

Graduates have been petitioning for years to be allowed to stay in their university cities to look for jobs rather than go home, often to rural areas with few prospects for graduates, or be forced to join the underground permitless economy.

"There has been a lot of talk about college graduates living in terrible conditions in Beijing, many of them to a room, leaving early and returning late at night. They are not living a happy life. They are called the 'ant tribe', an indication that there are many of them," UCLA's Fan said.

"It is particularly bad in Beijing, they are living like [economic] migrants. Because there are so many government jobs and they want to be there to access these jobs.

"These are educated individuals who could use the internet or social media to mobilise. The issue of unrest is always in the mind of the central government. The government is certainly very sensitive about communities and groups who have been unhappy for a long time."

This is not the first time the State Council has called for the easing of residency regulations for graduates. Similar measures were announced in 2009 when the unemployment rate for recent graduates was around 12%, according to figures from the Chinese Academy of Social Sciences.

The State Council also announced that graduates who relocated to western or central China would be eligible for a full refund of their tuition fees, dubbed the 'Go West' refund. Those joining the army would also be entitled to the repayments.

Booming cities in the south such as Shenzhen and Guangzhou have already eased their rules.

The Shenzhen city government said last year it would grant a Shenzhen hukou to graduates with in-demand subjects from 38 elite universities even before they had secured jobs in the city, in order to attract talented individuals, particularly in finance, science and technology, law and economics. It was later extended to graduates of 133 universities.

"It is a piecemeal effort. These sorts of announcements by individual cities are all different and a lot of details are involved [to qualify]," Fan said.

However, in Beijing population growth has led the municipality to cut back on new hukous for fresh university graduates. The Beijing city authorities announced on 17 May that this year's quota will be less than two-thirds of last year's. Some 10,000 Beijing permits were issued to new graduates last year.

And some media reports in China indicated that registrations were slowing down even for graduates with overseas PhDs wanting to move their families to the capital.

In response to the policy tightening, the black market price for hukous soared to 160,000 yuan (US$25,000), rising by 30,000 to 40,000 yuan in just a few months, according to a report in China's Global Times.

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