When Zheng Jin was laid off from her job at one of China’s biggest property developers in February, part of her was relieved to get out of an industry in decline. Three months later, and after applying for more than 400 jobs with no luck, she’s panicking.
“I can’t see light at the end of the tunnel,” says the 26-year-old, who’s had about a dozen job interviews without any favorable offers. She’d worked as a market researcher in Nanjing and was let go as part of a 30% reduction in the company’s staff after the government imposed stricter financing rules in the real estate industry, plunging the sector into crisis. “It feels that life has no hope,” she says. “I do not know how much longer I can take it.”
Zheng must now compete with tens of millions of twentysomethings who are struggling to find jobs as the pandemic and government regulatory crackdowns upend their career ambitions. In April, China’s jobless rate among 16- to 24-year-olds, a group that includes new college graduates, climbed to a record 18.2%. That’s three times as high as the national urban unemployment rate in China, and more than the 7.9% for the same cohort in the US.
Fears are growing that joblessness will get worse in the country, surpassing even the peak in 2020 when the coronavirus first began spreading. The latest wave of omicron outbreaks and crippling lockdowns in places such as Shanghai have forced companies to cut headcount or reduce wages if they were fortunate enough to stay in business. Millions of people like Zheng, who were fired from internet companies, edutech firms, and property businesses, are still trying to find work. And a record 10.76 million university students will graduate in 2022 and flood the labor market.
One of them is Xie Huiyu, a 25-year-old studying for a master’s degree in mathematics in the UK, who went to Shanghai in November 2021 to work as an intern for an internet company. She was promised a full-time contract in product operations after she graduates in the summer, but at the end of March, when millions of city residents were forced to lock down in their homes, the company abruptly ended her internship. It revoked her offer, along with those of about 40 incoming graduates in Shanghai, saying the business was in great difficulty because of the Covid outbreak. Since then, Xie, originally from Zhejiang province, has been confined to her rented apartment, relying on the financial support of her family back home and food given to her by her landlord.
“It’s been an excruciating process,” Xie says about her job search. “Sometimes I wonder what’s the use of getting so much education.”
The angst of young people is being vented on social media and spilling over into rare protests about Covid control at some universities. Those are tensions the Communist Party would be highly sensitive to as it prepares for a twice-a-decade Congress in the fall, when President Xi Jinping is expected to secure an unprecedented third term as leader. Top officials such as Premier Li Keqiang and his deputy Hu Chunhua have used stronger language warning about job losses than they did in 2020.
Jacqueline Rong, deputy chief economist for China at BNP Paribas SA, says it’s unlikely that unemployment has peaked yet, predicting it could reach as high as 6.5% in coming months. That would be a record since the government started compiling the figure in January 2016. The youth jobless rate could spike to near 20% in the summer when graduates hit the labor market, she adds.
Unlike in 2020, the Covid-induced economic slump this year is coming when the labor market is already under stress. Millions of jobs have likely been lost because of the shrinking real estate market and Beijing’s crackdown last year on internet platform companies and for-profit tutoring businesses.
Some of the country’s most well-known entrepreneurs are making unusual public comments voicing their grievances, including Yu Minhong, founder and chairman of one of the largest private education companies in China, New Oriental Education & Technology Group Inc. Yu’s company was forced to end all K-9 tutoring services and dismiss 60,000 workers in 2021 following Beijing’s overhaul of the $100 billion after-school education sector.
Just as the business embarked on a restructuring and was beginning to stabilize, the Covid crisis created a new set of pressures. Falling income means the company is forced to “further cut expenses on human resources,” Yu wrote in an article posted on his WeChat account in May. “Even though I tell myself again and again to be patient and that the hard times will pass, anxiety still grows when I think about the specific things I have to handle,” he said. “I rely on sleeping pills to beat myself into sleep.”
Even the technology juggernauts are shedding jobs. JD.com Inc., China’s second-largest e-commerce operator, cut the workforce in its community-buying unit, Jingxi, by 10% to 15% this year. Ride-hailing giant Didi Global Inc. planned to reduce staff by as much as 20%, Bloomberg News reported in February. Tencent Holdings Ltd., which reported in May its weakest revenue gain since going public in 2004, is closing multiple business units of its sports channels, according to local media.
The troubles are hitting college graduates particularly hard. Li Wen, 21, plans to take a low-paying job, working six days every other week as an assistant at an e-commerce company. With a major in English from a university in Nanchong, Sichuan province, she’d hoped to do a master’s degree in journalism. She’d failed the entrance exam after the university raised the cutoff scores sharply this year following a surge in applications. She wasn’t interested in seeking a job as a teacher, saying the competition has become fierce after the collapse in private tutoring businesses.
The job she’s reluctantly settling for pays 3,500 yuan ($526) a month, below the 5,000-yuan threshold of personal income tax payment in China. “I wondered if I should prepare to take the exam for graduate schools again, but I don’t know what kind of job market I will face in three years,” she says.
Beijing’s support for the labor market is largely targeted toward businesses, with only limited help given to those out of work. The government has provided incentives to companies such as tax breaks, given refunds on previously paid unemployment insurance premiums, suspended employers’ contributions on social security plans, and provided cash subsidies to companies to train employees.
Some provinces have announced measures to help college graduates. Jilin province, which was in lockdown for much of March and April, said it would increase government recruitment by 10% this year from 2021 and provide 20,000 jobs in some government-run service programs just for college graduates, almost tripling last year’s number. Guangdong province has a target to ensure more than 70% of this year’s graduates are employed by the end of July, promising to offer 68,000 jobs at state-owned nonprofits.
For many young job seekers, the lure of dropping out of the labor market altogether and joining others in a movement to “lie flat” is becoming stronger. The pressure of competing with millions of others for jobs is becoming too great for them.
“I’m very stressed right now,” says David Yang, a 23-year-old Shanghai student, who graduated last year from university with a major in finance. He’s been locked down in his home for weeks, unable to attend job interviews in technology hubs like Shenzhen. “You still believe you have a bright future, but suddenly you are banned from leaving your apartment and jobs all disappear,” he says. After sending out his résumé for dozens of job posts, he says he sometimes feels frustrated and just wants to “lie flat.” —with Tom Hancock, Daniela Wei, Mengchen Lu, and Allen WanRead next: Don’t Expect Chinese Stimulus to Save the Global Economy
©2022 Bloomberg L.P.
