Global Economics

China's College Graduate Glut


The mainland's high-speed economy can't easily absorb the nearly 5 million graduates streaming yearly into the workforce

With China's economy still at high speed and corporate profits and wages on the upswing, this should be a golden time to be a newly minted university graduate. After all, multinational corporations have been complaining that they can't find enough qualified people to hire. Factories along the coastal regions have been hit by a shortage of migrant workers.

But guess what? For college seniors graduating this spring, finding a job has been a real struggle. There are simply too many of them to absorb even for a growing economy like China. Just ask Yang Hanning, who will be graduating with a degree in computer science from Tianjin University of Commerce in July. He has sent out dozens of résumés and been called back for an interview for fewer than 10 companies. He has yet to receive a job offer.

"All of the jobs I've applied for are looking for people with experience. They give us recent graduates the cold shoulder," Yang, 23, laments. In fact only three out of his 22 classmates in the computer science department have received job offers so far, and none of the jobs has anything to do with their major.

Cutthroat Job Market

In 1977, the first year that Chinese university enrollment resumed after the trauma of the Cultural Revolution, only 4.7% of applicants, or 270,000 students, were accepted into college; a carefully managed trickle. And those lucky kids generally coasted into a stable job in a government ministry or state-owned enterprise. It was the fabled era of the "iron rice bowl" in which college grads received subsidized housing and rock-solid job security.

China's evolution since then into a more market-driven economy has also meant a far more cutthroat job market. This spring, 4.95 million seniors will graduate from colleges across China, nearly five times as many college graduates than China produced seven years ago.

"There are a lot of people in China. Everybody has a college degree and they're all competing for that one opening," said Liu Chao, 21, who will be graduating in July with a degree in computer science from Beijing Information Technology College. The joke floating around college Internet chat rooms is that college students nowadays are like cabbages: There's an abundant supply of them and their price never goes up.

Flood of Unemployed

The reason universities are churning out record numbers of graduates every year is rooted in the Chinese government's decision to expand university enrollment starting in 1999. With the Chinese economy slowing during the Asian financial crisis, Asian Development Bank economist Tang Min in 1998 proposed expanding university enrollment to boost domestic consumption. China was closing down state-owned enterprises and laying off millions of workers at the time, so it seemed like a good idea to send some of the 3 million high school graduates in 1999 to college and delay their entry into the job market.

Today it is unclear exactly how many recent college graduates are unable to find a job. Since 2001, the official figures from the Ministry of Labor and Social Security (MOLSS) claim that roughly 30% of college seniors have not signed an employment contract by the time they receive their diplomas in July, which is a typical number for the U.S. and other developed nations. In China, however, that would mean nearly 1.5 million recent graduates will be flooding the job market this summer.

"The MOLSS tabulates the unemployment figures for blue collar workers and doesn't really care about white collar unemployment. College graduates are white collar. The MOLSS doesn't know how many of them are unemployed and doesn't care," said Yao Yuqun, professor at Renmin University's School of Labor Relations and Human Resources. He added that unemployed college graduates are not counted in China's official 4.1% unemployment rate.

Spoiled Only Children?

However there is anecdotal evidence to suggest that it is a growing problem that has attracted the government's attention. Last November, a graduate student from the prestigious Tsinghua University committed suicide because he was unable to find work. Starting last year, college graduates who have been unable to find work by Sept. 1 have been allowed to register as unemployed with their local government offices and receive unemployment benefits.

Older Chinese complain that the current crop of college graduates born in the 1980s under the one-child policy have been coddled by their parents. Unlike their parents who dutifully went to work wherever the state assigned them, this generation of Chinese are pickier about where they live and where they work.

"Some college graduates will only work if they find a good job. If it's a regular job, they won't do it," noted Sun Baohong, head of the Shanghai Academy of Social Sciences' Institute of Adolescents.

Please Stay Home

College graduates expect to land nice white collar jobs after graduation. The reality is that China's economic growth is still largely driven by factories needing cheap, low-skilled workers churning out products for export. Hence, chief executives complain that they receive a mountain of résumés for administrative positions but are having a hard time filling openings on the plant floor.

Most college graduates have also shunned the countryside and flocked to China's major metropolitan areas, such as Beijing, Shanghai, and Shenzhen, to find jobs. The government has been trying to entice college graduates to spend a year or two working in rural areas after graduation by giving them bonus points if they apply to graduate school later. But young Chinese say that one reason they prefer to go to major cities to find work is because they feel the playing field is more level there, unlike in the countryside where "guanxi" or connections are needed to find jobs.

Companies say that China's educational system, which stresses rote memorization, turns out college graduates who can perform repetitive tasks efficiently but cannot think "out of the box" to attack problems creatively. Often college graduates simply can't do jobs they are hired for without further post-graduate training.

Experience Worth the Price

A European startup working on applying artificial intelligence to business cases moved its research and development operations to Beijing last year to take advantage of the cheap cost of Chinese software programmers and found this out the hard way. It originally posted job advertisements on the Internet and hired seven recent college graduates only to discover that some of the programmers were unable to write simple computer programs.

In February the company decided to start over from scratch. This time it hired a headhunter to find programmers with 5 to 10 years of experience. Even though it costs up to 10 times more to hire experienced programmers, as opposed to hiring fresh college graduates, the decision turned out to be worth it. "Of course the salary is different but you don't have redo their work and the work is higher quality. They would probably be actually cheaper than hiring fresh college graduates," said Nicolas Piguet, co-founder and R&D manager of the startup.

To be sure, many recent college graduates are aware of their shortcomings. They cite training and room for career advancement as one of the main factors when choosing where to work. "A lot of companies neglect career training. I don't get the feeling that I would learn a lot at these companies," said Jia Zhanjie, 24, who will be graduating with a degree in chemistry from Beijing Normal University. Even though he already has a job offer, he was still trolling job fairs on the weekends to see if he could find something better.

Limiting Number of Students

Not surprisingly, more and more college students are going to graduate school before entering the workforce. "After I return with my master's degree, it'll be easier to find work," said Luo Binhan, 23, who graduated with a degree in insurance from Wuhan University in 2005 and has taken the past year off to apply to graduate school overseas. However in the last couple of years Chinese students with graduate degrees have also found it harder to find work.

The Chinese government has started to take steps to improve the quality of education. The central government will invest 10 billion yuan ($1.3 billion) between 2006 to 2010 in vocational and technical schools to create more skilled workers. With factories facing shortages of skilled laborers, 95.6% of vocational school graduates had a job offer by the time they graduated last year.

Last year, the Ministry of Education also began to limit the number of incoming freshmen universities could accept to no more than 5% more than the year before. The rapid expansion of college enrollment had led to a shortage of qualified professors, leading to a drop in the standards. Renmin University's Professor Yao said, "A lot of people have been complaining to the Ministry of Education that their children can't find jobs. Expanding university enrollment has lost its attractiveness."


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