The youth unemployment rate in towns has always been an indicator of a country’s financial stability. Last year, under the influence of economic stagnation and a weak labor market, China’s youth unemployment rate reached a historic high, far exceeding that of other countries. This not only indicates that China’s economic difficulties are far from over, but also poses a potential challenge of social instability for the Chinese Communist Party.
According to a report by the Los Angeles Times, in June 2023, the proportion of unemployed individuals aged 16 to 24 reached a peak of 21.3%. China subsequently stopped releasing monthly data. In December, the government revised the statistical methods, excluding students, resulting in a much lower urban youth unemployment rate of 14.9%.
However, as millions of university graduates began seeking employment, this number rose again. In August, the recalculated youth unemployment rate hit a new high for two consecutive months: 18.8%.
It is no secret that China’s economy is in trouble. Local governments are heavily indebted. The property market slump has eroded the foundation of family wealth and weakened investor sentiment. Cautious consumers are hoarding cash. Major companies are laying off staff.
The fragile confidence of consumers and employers is putting pressure on overall recruitment. This year, a record 11.8 million university graduates are finding it difficult to secure suitable jobs. Industries that typically hire young, university-educated individuals such as real estate, financial technology, and for-profit education have been impacted by new regulations imposed by the Chinese Communist Party in recent years.
At the same time, many new graduates are unwilling to accept jobs that do not meet their expectations, with some preferring to “lie flat,” a term denoting aversion to intense work pressure.
China’s youth unemployment rate is significantly worse compared to other countries. According to the International Labour Organization, in 2023, the youth unemployment rate in the Asia-Pacific region was 13.9%. In South Asia, this figure is at its lowest level in 15 years. China’s data stands out in East Asia; in Japan and South Korea, the youth unemployment rate is at historic lows.
According to the US Bureau of Labor Statistics, in July, the youth unemployment rate in the United States was 9.8%, higher than the 8.7% recorded in the same period last year.
Phoebe Feng, Deputy Economist at the Institute of International Finance in Beijing, noted that “youth unemployment rates are more sensitive to changes in the job market situation.” Their unemployment rates directly reflect corporate confidence and hiring trends.
Professor Zhang Yifan of the Chinese University of Hong Kong’s Economics Department suggested that if young workers cannot find employment, a “scarring effect” may hinder their lifelong income, skill accumulation, and future career development.
Youth unemployment can also become a political burden. Their discontent may provoke anger towards the government or lead to social instability.
Even before China began releasing new youth unemployment data, some analysts speculated that the actual unemployment situation may be larger than what the data showed. Erica Tay, an economist at Maybank Investment Banking Group, expressed that due to China considering employment as working more than one hour per week, it cannot accurately tally the data of unemployed youths.
“Youth unemployment figures are closely monitored as they signify severe economic weakness,” she said. “If nearly one-fifth of non-student youths cannot secure even one hour of work per week, it indicates an unusually tight job market.”