Goldman Sachs analysts reported on Monday that the record-high unemployment rates among China’s younger population could be attributed to a discrepancy between the available jobs and the majors pursued by graduates. The report indicated that during the time period from 2018 to 2021, the education and sports industries saw a 20% rise in vocational school graduates. However, during this same period, the demand for new hires in the education industry significantly decreased. The analysts concluded that the lack of available jobs in information technology, education, and property contributed to the rise in unemployment rates among young people in China.
The Impact of Regulatory Changes
In 2021, regulatory changes had a considerable impact on the availability of jobs in China. Policymakers cracked down on internet tech companies such as Alibaba and real estate developers, which led to a decrease in labor demand in the information technology, education, and property industries. These industries also tend to hire more young workers, and thus, the weakening of labor demand in these sectors had a direct impact on the unemployment rates among China’s youth.
The Need to Address Youth Unemployment
The unemployment rate among people aged 16 to 24 reached a record high of 20.4% in April, which is significantly higher than the overall jobless rate of 5% for all people living in Chinese cities. The Goldman Sachs report warned that if youth unemployment remains high, it could impact the country’s economy in the coming years. The report estimated that China has approximately 3 million more unemployed 16 to 24-year-olds than before the pandemic. Policymakers have repeatedly stated that addressing youth unemployment is a priority.
To address the issue of youth unemployment, policymakers are working to expand vocational training in China. Keyu Jin, the author of “The New China Playbook: Beyond Socialism and Capitalism,” suggested that expanding the services sector could also provide opportunities for young people. Currently, the services sector accounts for only 50% of jobs in China, which is significantly lower than the 80% in Japan and the U.S. Jin believes that youth unemployment is a more pressing issue than China’s aging population.
The report by Goldman Sachs highlights the mismatch between graduates’ majors and the availability of jobs in China. The lack of available jobs in information technology, education, and property industries has contributed to the record-high unemployment rates among young people in the country. Policymakers are working to address this issue by expanding vocational training and the services sector.
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