Problems graduating

The government wants to ensure 6 million graduates find work

Problems graduating

Best foot forward: graduates are searching for work

You don’t have to have a degree in nuclear physics to operate a washing machine, but these days it could well help. The Guangzhou Daily has reported that the job outlook for this year’s crop of graduates is so bad that many are applying for posts as nannies and domestic helpers. A housekeeping recruitment agency told the newspaper that it was receiving around 600 applicants a month: 90% were university graduates and 28 even had master’s degrees.

With 20 million migrant workers recently losing their jobs, the government is highly concerned about the nation’s growing unemployment and its potential social consequences. China needs to find jobs for 6.11 million university graduates in 2009. That’s the equivalent of finding a job for everyone in Scotland.

China’s State Council – the nation’s top decisionmaking body – has reacted with seven policy measures aimed at boosting the job market for graduates. (This is in addition to the Rmb4 trillion the government is spending on fiscal stimulus.)

The measures are wide-ranging and complement other policy goals. For example, the government would like to see more skilled people working in second tier cities and rural areas (so as to develop the non-coastal regions). So one of the measures offers a financial incentive: the government will refund graduates’ tuition fees and student loans if they work in specific places.

The government also wants to move China up the value chain and promote research and development. So another measure proposes a specific fund that companies can draw on to pay the salaries of graduates who are employed to do scientific R&D.

In keeping with that spirit, another option is to keep students in education – with more funding for postgraduate studies. Xinhua reported that as of January 10 a total of 1.24 million took the entrance exam for postgraduate studies – 50,000 more than a year earlier.

But perhaps the most significant measure relates to the hukou. This is the Chinese residency card that connects every Chinese person with their birthplace. The hukou gives workers in their own city a whole range of special rights – from free education for their children at local public schools to retirement insurance. Traditionally a graduate with a hukou from, let’s say, Wuhan could not be employed by a company in Beijing and still receive all the social benefits a worker with a Beijing hukou would get.

The hukou system therefore behaved like a ball and chain around the graduate’s ankle, forcing many to work in their home city. With the current downturn, the government has now loosened restrictions so that graduates can now work wherever they want and receive almost all of the hukou social benefits (with the key exception of free education for children). In one sweeping move this (fairly revolutionary) change opens up more job possibilities to the roving graduate.

The government will also support graduates who start their own businesses with tax breaks and loans – with the latter granted at preferential rates. Universities are being instructed to set up venture parks and encourage entrepreneurial activities too.

Interestingly enough, the poor economic outlook has encouraged more graduates to seek ‘iron rice bowl’ jobs with the state itself. This is a reversal of a previous trend that saw graduates preferring the private sector and its get-rich-quick potential. Xinhua has reported that 775,000 applicants sat the civil service exam in December, even though only 13,500 jobs are on offer. By way of contrast, in 2006 a total of 530,000 sat the exam.

The government’s pro-graduate measures have been welcomed, although no one expects them to be a quick fix for what is a huge challenge. “The seven measures reflect the government’s active attitude towards solving the employment problems, and give a good signal and the right direction,” said Yang Weiguo, the deputy director of China’s Employment Research Institute at Renmin University. “But carrying out the measures will not be without difficulties.”

Wang Hongjun, a student at the International Relations College at Renmin University definitely agrees. He has just taken a written test for a job with Bank of China. Over 10,000 graduates took the test, with only 100 recruited. “The job situation this year is far from optimistic,” said Wang. “Many of my classmates have not found a job, while at this time in previous years almost half of the graduates had found one.”

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.