Graduate numbers increase, but are there jobs for them?

In the 21st century, China has achieved significant growth in the number of people going to university. The number of students enrolled in institutions of higher education has increased from 5.3 million in 2000 to 30.3 million in 2019.

While only 1.55% of high school graduates continued to university in 1978, that figure had risen to 50% by 2019. As a result, a record number of university graduates are entering the labour force.

The rapid increase in the number of university graduates at all levels has led to a rise in the number of employees with university degrees.

We recently analysed the educational attainment of the labour force in various occupational categories as reported by official Chinese labour statistics.

The data set included three types of post-high school education: the three-year degree, the four-year degree and the graduate degree.

It covered annual data for 20 broad occupational categories from 2005 to 2017. For the entire labour force, the share of workers with at least a three-year degree increased from 7.2% in 2005 to 18.1% in 2017.

This is a remarkable achievement in terms of the expansion of human capital, which has played an important role in the industrialisation and economic transformation of China. Yet this aggregate growth figure masks a significant variation between various occupations.

The largest growth in the share of employees with at least a three-year degree is observed in the mining sector – up from 3.7% in 2005 to 12.7% in 2017.

This increase indicates that many employees who joined the sector during this period have had some type of vocational (three-year) training.

Yet, during the same period, we see a decline in the proportion of employees who hold a three-year degree in several occupations and this decline is associated with a sharp increase in the share of employees who hold four-year and graduate degrees.

This pattern is most visible in the following sectors: a) education, b) scientific research and technical services, c) entertainment, sport, culture and management of public spaces and the environment, and d) public management, social security and social organisations.

Job candidates with four-year and graduate degrees have displaced both high school graduates and three-year degree holders in these occupation categories.

The occupations with the largest growth in the share of employees with four-year degrees are mining, which saw a more than fivefold increase, up from 1.3% to 8.2%, and the wholesale and retail trade (up from 1% to 5.6%).

For the entire labour force, the share of employees with four-year degrees rose by 266%, while the share of employees with a three-year degree rose by just 92% between 2005 and 2017.

The share of employees with a graduate degree was only 0.1% in 2005, but it rose to 0.8% in 2017. This is very small in comparison to the United States where nearly 15% of the labour force has at least a masters degree.

Gender differences

In both 2005 and 2017, the gender gap in educational attainment was relatively small and the growth of educational attainment was more visible among female workers. While the share of male workers with at least a three-year degree rose from 7.7% in 2005 to 17.5% in 2017, the same indicator rose from 6.6% to 18.9% for women.

As a result of the faster growth of university education among women, the gender gap was reversed in favour of women in several occupational categories. In some occupational categories where there had been fewer women than men in 2005, the tables were reversed by 2017. Not only did women catch up with men by 2017, but there were more of them with university degrees than men.

The occupations are: Construction; International Organisations; Leasing and Business Services; Culture and Sports, Health and Social Services; Public Management, Social Security and Information Technology; Financial Intermediation; and Production and Supply of Electricity.

In light of the fact that university participation rates for women have sharply increased in the past two decades, this is not a surprising outcome. In 2016, women accounted for 52.4% of undergraduates and 50.6% of graduate students in China.

Growing concerns about a lack of good jobs

Unfortunately, despite the low share of university graduates in many occupations, there is a surplus of university graduates in some fields of specialisation and young people are experiencing very high unemployment rates in the first few months after graduating with a first degree.

This is partly a result of a mismatch between the large demand for technical and vocational skills and a large supply of graduates with four-year degrees in standard academic fields.

Another cause of this high unemployment rate is that most available jobs pay relatively low wages and benefits, even when the job requires a university degree. As a result, many university graduates stay away from those jobs and try to go back to university to get graduate studies instead.

In the next few years, the enrolment of students onto graduate degree courses will rise sharply as many young people try to get ahead of the intense educational competition by earning graduate degrees.

For now, the Chinese government is encouraging this ongoing educational expansion despite rising unemployment among university graduates.

In a few years’ time, however, the country might face a surplus of job seekers with masters and PhD degrees.

At that point, the government might decide to discourage the educational rat race and try to direct more high school graduates into vocational work and into developing manufacturing skills that do not require a university degree.

Nader Habibi is an economics expert in the Crown Center for Middle East Studies at Brandeis University, USA, where Jingyin Yang is a senior student.