06/03/2023, 19.32
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From zero-COVID to zero dynamic: Henan now seeking 'zero' youth unemployment

by Alessandra Tamponi

China's third-most populous province has launched a "100-day" plan to reduce youth employment, now at 20.4. Massive government intervention and sending graduates to rural areas are meant to overcome the crisis of the private sector, hit by the pandemic but also by measures against high-tech companies. This is unlikely to be effective while discontent grows in universities.

Beijing (AsiaNews) – Henan Province recently announced a short-term plan to combat youth unemployment, by making it easier to hire young graduates. The policy is especially targeting those with disabilities, from low-income families, or stuck in long-term unemployment, and is set to be implemented in a hundred days between May and August.

For the provincial Department of Education, the priority will be this year’s graduates, particularly penalised by the years of pandemic compared to students who graduated in previous years.

Henan is China's third most populous province and expects to have at least 800,000 new graduates this year alone.

Universities will play a key role in implementing the plan over the set period. Their task will be to identify the students and promote future opportunities – like offering a second course of study, or getting students hired by the government and state enterprises or working in rural areas. They will also provide graduates with the individual training needed to be hired, training that could also differ from the studies the latter had pursued, and contributed to the mismatch between education and degrees and actually available jobs.

Dubbed "zero-dynamic clearing", the approach echoes inevitably Chinese President Xi Jinping's zero-COVID policy. Its aim is to combat youth unemployment through major government intervention. But can short-term plans by the authorities offer a realistic solution to the complex problem of youth unemployment in China?

When the Zero-COVID policy was in place, young people showed dissatisfaction towards the long lockdowns and launched the blank paper protests. At present, young Chinese are unhappy and disillusioned with their professional future. For the government this risks becoming a political as well as a social problem.

Unemployment rate among those aged 16 to 24 has been rising since 2018, getting significantly worse during the pandemic. Today it is not uncommon headlines in the local press that read “Out of school equals out of work” (毕业即失业), highlighting a significant vulnerability of highly educated and skilled young people.

According to the National Bureau of Statistics of China, youth unemployment hit 20.4 per cent in April, far higher than in countries like Japan (5 per cent), South Korea (6.5 per cent) and Taiwan (11.75 per cent). What is more, the number of unemployed young people in the country could increase by 50 million by 2028, the worst figure since 1978.

The youth unemployment normally reaches a peak in June and July, when diplomas are awarded. The timing of Henan's plan suggests more of a half-solution aimed at not making the numbers worse than a strategy that can meaningfully address the problem.

The number of graduates in China has grown faster than the demand for labour, and many sectors popular among educated young people – education, entertainment, or information technology – are among those currently growing more slowly.

In a report, Goldman Sachs Group notes that degrees in sectors such as education and sports grew by 20 per cent between 2018 and 2021, but demand collapsed over the same period.

Meanwhile, anti-COVID policies and prolonged lockdowns have hurt small and medium-sized businesses, especially in the service sector, affecting employment, especially in urban areas. In 2022, 10 per cent of China's small and medium-sized enterprises went bankrupt. And recent government policies have compounded the problems created by the pandemic, further weakening both the private sector and the national labour market.

In 2021, the Chinese government massively cracked down on major technology companies, limiting their growth. The best-known case is that of Alibaba, but affected companies include Tencent, ByteDance (owner of TikTok) and Baidu. Fines resulting from antitrust probes have caused companies to lose billions of dollars, slowing down one of the most attractive sectors for young people.

Strategies such as the one proposed by Henan seek to facilitate access to employment in government administration and state-owned enterprises. However, the most opportunities for young workers are to be found in China’s private sector. In fact, over the past 10 years, for every 1 per cent of GDP growth, private companies created 6.4 million jobs, against 1.8 million for state-owned enterprises.

In China, the private sector accounts for 60 per cent of GDP, 70 per cent of technological innovation, and 80 per cent of urban employment, and it is precisely the difficulties of the private sector, especially in the big cities, that have had a significant impact on youth unemployment.

To reduce it, the government has begun to promote initiatives entailing the return of skilled young people and out-of-town workers to rural areas. This is also part of Henan's plan, Guangdong has announced similar plans to send 300,000 young people to rural areas by 2025.

Such initiatives are an attempt to solve the problems the Chinese government faces as it struggles to bridge the gap between rural and urban areas rather than meet the employment crisis head on.

Rural life is often romanticised by influencers who present an idyllic life in remote areas of the country. A well-known case is that of Li Ziqi, a 29-year-old from Sichuan who has become a star on Douyin,[*] thanks to his videos of life in the countryside.

However, young professionals who choose to leave the cities struggle to build a life in places that lack healthcare facilities and services, where schools close from low enrolment and lack of teachers, where salaries are significantly lower than in urban areas.

In the local media, this type of action has been dubbed “Down to the Countryside 2.0”, clearly echoing the Maoist policy of the 1960s and 1970s that saw the forced transfer of young graduates to the countryside.

So far, this strategy has not met with great success among the target group. Students who seek professional fulfilment in accordance with their training rather than just the best available job are thought to be unable to settle down.

When it comes to job training, universities have been urged to give priority to students more interested in permanent jobs than employment in their own fields. This makes it easier to employ young workers in sectors targeted by the government, but the net effect is to delay solving the problems that afflict the sectors currently in crisis.

Even if this were to alleviate the unemployment problem in the short term, it might also have a significant impact on the level of dissatisfaction among young Chinese.

[*] A short-form video hosting service.

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