Xi Jinping, China’s Chief Career Planning Officer?

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Over the next few weeks, China will bring together a record 10.8 million college graduates. Finding jobs for them has proved to be an unexpected headache for President Xi Jinping’s government, which has struggled to curb Covid-19 outbreaks with city-wide shutdowns.

The prospects are so bleak that some universities have encouraged seniors to postpone graduation. Students complained to Caixin that they were not allowed to defend their thesis unless they had found a job. Some were forced to declare that they wanted to be “self-employed” just so they could get their diplomas. By April, less than half of the graduating class had received a job offer, according to online recruitment site Zhaopin Inc.

State-funded universities are under a lot of political pressure. In May, urban youth unemployment hit a record high of 18.4%. In July, which is the peak of the exam season, it could reach 23% according to estimates by Bank of America Merrill Lynch. As such, universities need to do their part to keep this number down. After all, strict Covid controls at the expense of rising youth unemployment are not a good thing for Xi, who is expected to win an unprecedented third term later this year.

New university graduates are increasingly hoping the government can get their first job. State-owned enterprises are the most desired locations, while only 17.4% of the class in 2022 want to work for a private enterprise, according to the latest Zhaopin survey.

However, that is not what the state is prepared to offer. Since the late 1990s, state-owned enterprises have reduced employment, halving the number of urban workers to only about 55 million. Public jobs are also in demand, but the number of new recruits has remained stable at around 170,000 a year.

Instead, in the last decade, the private sector has become China’s largest employer with around 150 million urban workers. In the cities, there are also more than 110 million self-employed people who get part-time contracts, small jobs or gig economy work. A few managed to become influential on social media.

As a clear indication of how scarce urban jobs have become, the southwestern province of Yunnan recently offered new college graduates an annual grant of 50,000 yuan ($ 7,464) per year. person to work in rural villages. Some network users joked that it was a repeat of 1968 “down to the countryside” when Mao Zedong sent privileged city kids to remote areas to learn from farmers.

Whether Yunnan can deliver is anyone’s guess. The grant is not a small sum – it would be about five months of the average starting salary for graduates from the elite Tsinghua University.

Two years ago, China’s labor market returned rapidly after the first pandemic outbreak. There was not much financial trauma at the time. Only a small area around Wuhan, Covid ground zero, was affected. Within three months, life was back to normal.

The labor market is not so robust now. A years-long technological downturn has wiped out a large part of the demand for young, educated and Internet-skilled workers. Shanghai and Beijing – which produced 18 of the top 20 schools with the highest graduate salaries – have struggled with Covid outbreaks since April.

Meanwhile, the growing number of admissions to universities over the last decade has expelled a workforce that is increasingly incompatible with what the economy needs. Fresh university graduates now account for more than half of the new labor supply, estimates HSBC Holdings Plc. Literature and art are among the most popular majors.

During his reign, Xi has raised the economic status of state-owned entities and cracked down on the “disorderly expansion of capital” by the private sector. Well, he has more than he wanted. Attracted by the state’s prestige and economic security, young people now want his government to be able to offer jobs. Aside from being president for life, perhaps Xi could also become China’s head of career planning?

More from this author and others on Bloomberg Opinion:

China’s big problem that Xi Jinping can not solve: Shuli Ren

• Are we blaming Gen Z for their Covid misery ?: Chris Bryant

• Do you feel squeezed into a salary of $ 250,000? Just wait: Alexis Leondis

This column does not necessarily reflect the opinion of the editorial staff or Bloomberg LP and its owners.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She was a former investment banker and was a market reporter for Barron’s. She is a CFA charter holder.

More stories like this are available at bloomberg.com/opinion

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