Coronavirus clouds prospects for record graduating class

A record 8.74 million students are about to graduate from universities and colleges across China with bleak employment prospects in a time of coronavirus. While the employment outlook for new graduates was already seeing a dip in the past year due to slowing economic growth and the China-United States trade war, the severe disruption of higher education and the economy from the coronavirus shutdown has added to student employment fears.

Universities have been closed across the country since January, with graduation examinations and evaluations postponed, and major graduate recruitment fairs cancelled under government orders, adding to the dire economic situation in China as companies in virtually all provinces shut down for extended periods.

Recruitment website noted that in the third week of January – the week the shutdown in Wuhan was declared – jobs for Chinese university graduates were down 44% compared to the same period last year. With further subsequent shutdowns around the country, prospects will have deteriorated further.

Some two-thirds of all workers joining the workforce will be new university graduates, up from around 50% just three years ago. However, even as work begins to resume in March, particularly in manufacturing, companies will not be expanding in an uncertain economy, experts say.

The looming graduate employment crisis has been acknowledged by China’s leadership – an indication that it is serious enough not to try to gloss over.

“The employment of university graduates has a been a serious issue in China, but this year it’s a record [in terms of numbers] and the situation is much more difficult. The government is very worried,” said Qiang Zha, associate professor of higher education at York University, Canada.

After a 25 February meeting of the State Council – equivalent to China’s cabinet – state television reported that “more attention will be paid to the employment of key groups such as college graduates and migrant workers”.

New measures agreed at the meeting chaired by Premier Li Keqiang include an expansion in graduate degree places to reduce the number of jobseekers, an increase in the number of students upgrading from junior colleges with short degrees to four-year university degrees, and increased recruitment of primary medical and social services posts. A boost in local and rural employment was also announced.

With some 400,000 more students due to graduate this May compared to last year, Weng Tiehui, a Ministry of Education vice-minister, said at a press conference on 28 February that the number of postgraduate places would be increased this year by 189,000 compared to last year, with a particular focus on certain subjects including clinical medicine and public health, artificial intelligence and integrated circuits.

Increased graduate places

Increased college places would include vocational and applied courses, including preventive medicine, emergency management, services for the elderly and e-commerce.

Even in more normal times, “only half of university graduate students secure a job in the same year. Others seek alternative options and find short term jobs for a while, or move up to graduate programmes or study abroad,” Qiang said. But those who carry on to graduate degrees or study abroad tend to be included in statistics on employment.

Coronavirus requires some immediate strategic responses to contain the short-term consequences. “But the trade war and consequent economic downturn could bring a long-term effect on employment, and I believe the Chinese government has some longer-term considerations in this increase in graduate places, using this strategy to upgrade its industry,” he said.

“Last year the government increased enrolment in vocational higher education colleges as a strategic response to the [China-US] trade war,” said Qiang. They added one million students to vocational colleges to “rescue” the job market. “That is still going on, though not to a level of one million,” he said.

But this year, in response to coronavirus, some 320,000 students in higher vocational colleges will be moved up to university programmes through special pathways, he said. With the additional graduate places and moving up of vocational students to university programmes “it means about half a million students will not need to look for jobs this year”.

Graduates from Hubei province – the epicentre of the virus outbreak – or from universities in the province would receive favourable treatment in masters degree enrolments as well as government-funded recruitment programmes in rural areas, Vice-Minister Weng said, adding that more “targeted” measures would be introduced for graduate employment.

Education authorities would “persuade employers” to prolong the recruitment period, which normally kicks off in February and March, Weng said and urged universities to ease graduation formalities including the face-to-face defence of theses.

Weng also announced greater flexibility for graduating students to keep their residential status in their university towns for up to two years rather than six months to a year after graduation so that they can continue their search for a job without having to return home.

Severe impact on top of trade war

Even with special measures, the impact on this year’s graduating cohort is likely to be severe coming on top of a decline in economic growth rates and disruption from the ongoing China-US trade war. GDP growth rates were already being revised downwards to the slowest in three decades at below 6%.

“Graduate employment in China was already affected even before the coronavirus outbreak,” said Deborah Elms, executive director of the Asian Trade Centre in Singapore. “But the hiring slowdown under the US-China trade war was restricted to certain sectors (such as electronics and export-led manufacturing) and certain kinds of company, while the virus slowdown is across the board.”

Smaller firms, which have been big recruiters of new graduates, had already begun a clampdown on hiring graduates early in the trade war in 2018, she noted. “Even if they did not lay people off, they certainly won’t be hiring more students and that has been totally accelerated under the virus. Now hiring is completely frozen.

“Many smaller businesses in China are going to be going bankrupt by the end of this month and beginning of next month, because most small firms have no cash on hand,” according to Elms. Government support to businesses announced in recent weeks is usually in the form of tax concessions and is little use to companies bringing in no income, she added.

The Chinese government has in the past been very proactive in boosting graduate employment in difficult times, said Todd Maurer, CEO of Edunomix, a Los Angeles based consultancy firm on global education and human capital, pointing to a big dislocation in graduate employment after the 2008 global financial crisis. At that time the government expanded civil service and state-owned sector hiring, which was important for new graduates.

However, “the state-owned sector is not a big employer of graduates incrementally. The big driver in China would be private industry, smaller and medium-sized enterprises,” which are the most vulnerable during the shutdown.

“Investors have definitely become more cautious. I would not expect private-sector investment to just bounce back to levels where it was before [the outbreak],” Maurer says.

He adds that masters degrees will be an alternative for many graduates. “But I think that’s fairly marginal in terms of the overall graduate pool coming out.”

The effect on graduates of increased opportunities in rural areas is limited, as these jobs are not popular among new graduates.

Push towards online recruitment

A major focus of government efforts is to facilitate online recruitment through massive portals that can match students with employers. The Ministry of Education has organised a dozen online job fairs with different industries, with another 18 such events planned, Vice-Minister Weng said.

On 28 February the education ministry, in conjunction with major recruitment companies, officially launched what it calls a “round-the-clock online recruitment service” for university and college graduates.

One of the five government-backed online services launched this week was a huge joint initiative by China Media Group (CMG), which runs the main state television and radio broadcasters, the State Development and Investment Corporation – the country’s largest state-owned investment company, and the National Development and Reform Commission (formerly the State Planning Commission) to bring recruitment resources of private and state-owned companies onto the existing CMG platform.

Some 70 state-owned companies are among the employers involved in the project, which also includes private companies such as technology giant Huawei, retailer and Haixin Group, with the medical health industry as its main business.

Students can submit their résumés through the platform, while employers can hold recruitment briefing sessions and conduct online Q&As, according to official media. Around 75,000 positions are said to be on offer, though not all are aimed at new graduates.

Other regional and provincial recruitment portals have been launched. Beijing municipal government launched a “2020 Beijing Graduates Spring Online Recruitment Month” initiative together with the Municipal Education Commission and other departments.

“Recruitment fairs are an enormous attraction for companies to handle their hiring for the year. They rely on these career fairs to gather a lot of candidates,” Maurer said, but added that online recruitment cannot be as effective as the usual graduate fairs.

“The scale of the graduate career fairs in China is enormous – thousands of companies and tens of thousands of candidates coming through; they are really like giant conventions,” he said.

But even with hiring shifting online, Maurer predicts huge logistical problems in May and June with millions of Chinese graduates coming onto the job market.

Even if recruitment can be handled online, there will be other major bottlenecks. “Will degrees be granted in time for a lot of these students? How will employers look at students who may not have been able to complete their degree if they were expected to graduate in May?” said Maurer.

With restrictions on travel, “just interviewing 20 different candidates and bringing them into your offices might create some screening issues – it’s not going to work as smoothly as before.”