A job fair in China’s southwestern city of Chongqing on April 11, 2023.
Str | Afp | Getty Images
China’s youth unemployment rate in August rose to the highest level since the new system of record-keeping began in December, data from the National Bureau of Statistics showed, amid an economic slowdown.
The jobless rate for people in China ages 16 to 24, and not in school, rose to 18.8% last month, according to the latest data on Friday. That’s up from 17.1% in July, and 13.2% in June. China’s urban unemployment rate across all age categories rose 5.3% in August, compared to a 5.2% climb in July.
China paused reporting the youth unemployment rate for much of the latter half of last year while it reassessed its calculation methods. The updated jobless rate for young people excludes those who are still in school, reflecting the increasing number of individuals pursuing higher education in a more competitive job market.
“It’s increasingly hard for young people to find high paying jobs as before, because in the past three years, the high value-added city services sectors which used to absorb many fresh graduates were in sharp contraction, in particular real estate, finance and IT,” said Dan Wang, chief economist at HSBC.
China’s youth unemployment has also been affected by restrictive hiring policies amid a struggling economy as companies are refusing to hire recent college graduates due to the difficulty and costs involved in firing workers in China.
“Many companies are refusing to hire recent college graduates now because they worry about the costs and legal difficulties if they have to let someone go a year down the line if the economy remains in the doldrums,” said Shaun Rein, founder of China Market Research Group. .
“Companies have to pay n+2. If someone works for 2 years, i.e. a 30 day notice plus 2 months salary. This is expensive so no one wants to fire anyone now or hire anyone new,” he noted.
“That’s why the [overall] unemployment rate isn’t that bad but the unemployment rate for youths is so high,” Rein added.
The data comes on the back of a slew of other disappointing numbers from China in recent weeks, with retail sales and industrial production growing at a slower-that-expected pace.
Despite growing calls for policy easing and stimulus measures, the People’s Bank of China also left its key benchmark rate on hold on Friday. Following a lackluster recovery last year from the Covid-19 pandemic, the world’s second-largest economy continues to face challenges due to a decline in the real estate market and weak consumer confidence.