China’s unemployment rate peaked after the country announced 7 weeks of rigorous lockdown after confronting the worst COVID-19 outbreak since the onset of the pandemic in Wuhan. According to reports, the unemployment rate bumped up to 6.1% in April, the highest since February 2020 as coronavirus cases doubled in the commercial hub of Shanghai. Earlier last month, China recorded an 18.2% unemployment rate among youngsters (age 18-24).
The “challenging” situation comes to light as a record number of 10.7 billion college graduates are expected to join the job market this year, South China Morning Post reported, citing the Chinese Ministry of Education. Chinese Premier Li Keqiang has described the balance between the unemployment rate and sluggish economy as “grim and complex.” Noting the bleak future of jobs in the country, many university graduates are looking for prospects outside the country to cope with growing competition.
Job crisis in China
Partial and full lockdowns for over 7 weeks under the ‘zero-COVID’ policy have bit into the job prospects of the world’s second-largest economy. Owing to the government-ordered measures, at least 31 cities which are home to 22 million of the population in China were under complete shutdown, as per CNN. The unemployment rate skyrocketed as the lockdowns forced billions to strictly remain indoors as infection rates touched four digits. Industrial production, retail, financial and construction sector and all other pockets of the economy took a hard hit due to the strict stay-at-home orders. In addition, a targeted crackdown on tech companies also expedited the toll on employment opportunities. The extended lockdowns pushed the economy to what Societe Generele analysts described as a “near breaking point.”
Although the cases have reduced in the pandemic epicentre, leading to the gradual relaxation of the sweeping curbs in some areas, the return to normalcy is predicted to be slower than expected as restrictions on movement will remain in place until May 21, said Shanghai Deputy Mayor Zhong Ming, as reported by BBC. He added that the reopening of the industrial, financial, and trading sectors will take place in “stages.” Industrial production fell by 2.9%, leaving massive constraints on supply-chain management. While Chinese media reports suggested that the “hustle and bustle” of the city life is slowly returning, the on-ground report is far from it, BBC reporters in China said.
Lack of job security, and low salary force Chinese youth to move overseas
Earlier last month, Urban surveys showed that the hand-counted job opportunities for fresh graduates in China would offer them an average of $935 (Rs. 72,488), which is at least 6% low salaries compared to the graduates last year. Noting the repercussions of the 1.5 months-long lockdowns, Chinese students are now looking forward to continuing studies abroad. 21-year-old Jin Jing saw herself graduating from Shanghai or Hangzhou but now she is enrolled at Monash University in Melbourne and looks forward to seeking a job there, SCMP quoted her. However, those coming from less financially stable backgrounds are forced to continue rigorous job hunts on the mainland. 19-year-old Dai Xiaoyan has been unable to work for 2 years after she lost her internship due to lockdown, according to SCMP.
Beijing promotes entrepreneurship to keep the economy sailing
With the job crisis mounting, many graduates are either going home or travelling overseas to look for employment. Noting the “grave” situation, China’s second in command, Li Keqiang urged the local governments to launch incentives to promote small-scale entrepreneurship. Also, the Shanghai government has offered tax cuts and subsidies for college students who start new businesses. But for students like Jin and Dai, it is not a “realistic solution” given the lack of capital. Now, as China aims to mitigate the unprecedented job crisis, experts say it will have to create at least a million jobs each year.