Just 29% of Shanghai’s college graduates had jobs on graduation.(Photo: Wikimedia Commons)
This week marks another anniversary of the 1989 Tiananmen Square protests, which were brutally suppressed by the Chinese government. Not surprisingly there isn’t much talk on the subject in China, where search terms such as “June 4,″ “Tiananmen,” or even “uprising” censored on China’s Twitter equivalent, Sina Weibo. One factor contributing to the atmosphere of forced silence is the fact that about 500 million of China’s billion-plus population is under 25 years of age, i.e. born after 1989. Most of them simply don’t know what happened and are preoccupied with more immediate concerns such as finding a job, which is becoming harder and harder for young college graduates.
Despite China’s breakneck pace of growth in the last three decades, a sizable portion of its youth population is out of work. China’s economic growth continues to expand the ranks of the middle class and its one-child policy created entire generations of children who are the sole focus of their parents’ resources and ambitions. As more and more families can afford for – and in fact expect – their children to go to college, the ranks of graduates swell even as the overall population is aging and the workforce shrinking. As the country’s GDP slows down, fewer of them can find employment, especially in coveted but limited civil servant jobs or positions with state-owned enterprises. In fact, over the last ten years the number of college graduates has risen sixfold but the number of jobs available has dropped by 15 percent since 2012.
We’re talking about significant numbers here. Almost 7 million Chinese students – a record number – will graduate from college in July. Compare that to the U.S. average of 1.75 million graduates per year. Yet only 28 percent of them have signed employment contracts in Beijing, 29 percent in Shanghai, and 47 percent in Guangdong province – and these are China’s economic hubs.
In search for new ways of creating jobs, China is talking entrepreneurship and small business. At a recent executive meeting of the State Council Premier Li Keqiang said, “We should explore more employment channels and develop more job opportunities and guide college grads to work in small and medium-sized enterprises, non-public sectors and grassroots places.”
Zhang Yi at the Chinese Academy of Social Sciences agrees that SMEs can be a major driving force for economic growth but says that more government support is needed in the areas of education, finance, and taxation to create better incentives for entrepreneurship. The payoff can be substantial: Zhang notes that every additional percentage point of GDP growth that SMEs would provide can help create 1 to 1.2 million jobs.
But creating a truly conducive environment for entrepreneurship and small business requires reforms in a number of other key areas: more secure property rights, impartial courts, less corruption among public officials. These are the things that young graduates need to pursue entrepreneurial ventures and to look toward the future hopefully brighter than that of their counterparts 24 years ago. Will the government walk the talk?
Anna Nadgrodkiewicz is Senior Program Officer for Global Programs at CIPE.