GIGA Working Paper

China's Ticking Time Bomb

Very few Chinese youth are unemployed - according to official numbers. However, these figures are not accurate, explains Günter Schucher.

China’s leadership currently seems to be extremely worried about unemployment, and particularly youth unemployment. Judging from their speeches and press commentaries, they seem concerned about the country’s current unemployment rate – which officially stood at a low 4.05 percent in 2013 (MOHRSS 2014).

While many commentators continue to conjure up the specter of social unrest, only recently Premier Li Keqiang and Minister of Finance Lou Jiwei used the stage provided by the National People’s Congress to warn that, next to GDP growth and inflation, guaranteeing employment is a key factor in China’s economic and social health. Li thus pledged to create at least another 10 million jobs in 2014 (Xinhua 2014b).

Meanwhile Yin Weimin, Minister of Human Resources and Social Security, “was surrounded by reporters, with some bombarding him with questions of how he was going to tackle the tough challenge faced by college graduates in finding jobs” (Chen 2014). On 30 April 2014 the State Council, led by Li, adopted a special program to help promote employment opportunities for the college graduates of 2014 (n.a. 2014c).

So, what reasons might lie behind these concerns and activities on the part of the country’s elites? One might be that unemployment is actually higher than the official figures portray it to be. Alternative calculations based on household or population surveys indeed reveal a different picture. The number of people out of work might even rise in the near future with the slowdown in production expected to continue, due to both the slump in incoming orders from crisis stricken trade partners and to the announced rebalancing of China’s economy.

Thus, another possible reason for the leaders’ anxiety is that China could soon run into similar problems to those that many developed and developing countries have themselves recently faced. Party‐affiliated newspapers and research groups in China have closely followed youth unrest in Cairo, London, and New York, to mention only a few examples (CCP 2011; PD 2011; GT 2013; Hu 2013). Economic discontent was one of the main drivers of the massive protests witnessed in many parts of the world in 2011. People everywhere had failed to reap the benefits of growth and were thus confronting high rates of inflation and unemployment. Among them, young men and women were the hardest hit in many of the affected countries and were therefore demographics strongly represented among the protesters (Brancati 2013).

The International Labour Organization (ILO) estimated there to be 74.5 million unemployed young people aged between 15 and 24 worldwide at the end of 2013, although the number of idle youth is much higher (ILO 2013a). The World Bank estimates there to be 621 million currently inactive young people around the world (WB 2012). They are called hittistes (“those who lean against the wall”) in Tunisia, freeters (an amalgam of the English “freelance” and the German Arbeiter) in Japan, or just NEET (“not in education, employment, or training”) in international labor statistics.

A lost generation of the disillusioned, unemployed, and underemployed form the recruitment pool for unrest in many countries of the world. They have been among the driving forces of the “Green Revolution” in Iran in 2009 and of the “Jasmine Revolution” in the Arab world in 2011, and have also been significantly involved in the protest activities in crisis stricken Spain (Austin 2011; Haouas et al. 2012; Kraushaar 2012; Sánchez 2012; Boughzala 2013).

Alongside large income disparities, increasing youth unemployment is one of the most pressing challenges that the world faces today (WEF 2013). The majority of observers consider the issue to be a “ticking time bomb” able to destroy a country’s social fabric and to cause severe economic damage. Far fewer people seem to take it as an opportunity for economic development.

The World Economic Forum suspects that youth unemployment might even eventually tear a region like Europe apart (Chan and Dodge 2013). Meanwhile in South Africa, a country where young people were once looked to as the champions of a great future, the discourse has recently taken a dramatic turn toward the portrayal of unemployed youth as the “single greatest risk to social stability” (Lefko‐Everett 2012: 7).

China, however, seems to tell a different story. Although protests – and particularly labor protests – have continuously risen during the last two decades, resulting in the listing of China as a “high risk” country in social unrest indices (Kekic 2013), unemployment per se – meaning not finding a job, or at least a suitable one – has not mobilized many people.

This is different in the case of workers who have been laid off though. Among the 1,293 strikes and protest activities listed in the database of the Hong Kong China Labor Bulletin since January 2011 (covering incidents up to February 2014), around 15 percent have been caused by some kind of layoff (CLB 2014). But there have been almost no news reports about unemployed Chinese youth protesting against their job situation. While the protests of unemployed youth rocked the authoritarian regimes in North Africa in Spring 2011, calls for a Jasmine Revolution in China had almost no resonance at all.

Explanations for this have made reference to repression, China’s economic growth record, and the acceptance of authoritarianism because of material interests having been satisfied – explicit acknowledgement has also been given to the absence of a genuine youth unemployment problem (Bell 2011; Dickson 2011; Lye and Fu 2011; Munro and Zeisberger 2011).

Nevertheless, the Chinese people are somewhat anxious about the deficiencies of the country’s employment situation – a third reason for China’s leaders to also be concerned. Whatever poll one might consult, job problems and unemployment have ranked among the Chinese people’s top ten concerns for many years (Li et al. 2013b; PewResearchCenter 2013; Yuan et al. 2013). But the Chinese people are not particularly worried about the prospect of not finding a job (Zhao 2013); they rather complain about discrimination and injustice preventing them from finding adequate employment.

Young people often face a job reality far different from their own expectations or those of their families, who financed their education (RMRB 2014; Xinhua 2014c). This hold particularly true for all those who took the expansion of higher education in 1999 as a chance to participate in the newly created opportunities for upward social mobility and whose aspirations have been dampened by the state’s failure to increase in tandem the number of elite positions available. The absence of an unemployment problem does not necessarily mean that the problem of inadequate employment does not exist though. Rising frustrations among educated youths facing a skills–employment mismatch, inadequate jobs, or even unemployment are thus a further reason why the Chinese leadership is now worried – with their concerns fueled by the recent popular revolts in Tunisia and Egypt, which were preceded by the expansion of the higher education sector in both countries (Goldstone 2012).

Unemployment per se is only an incomplete measure of the actual employment situation, and is not the sole predictor of the potential for unrest. To obtain a full picture of the current reality we have to also include idleness, underemployment, as well as those in over‐ and underqualified forms of employment. This kind of overview of China’s youth employment situation does not exist as yet, and this paper will try to fill this gap. It is structured as follows: To start with, I will explain the different dimensions of youth employment, as there is the demographic dimension, unemployment itself, the amount of inactivity, mismatch, and the significance of the number of atypically employed young people. These five dimensions are then each dealt with in the subsequent parts of this article. Then I will shortly reflect on youth unemployment and unrest both in general and in China particularly. In the concluding part, I will wrap things up by discussing the “real” youth employment problem faced in China. [...]

Continue to read: Günter Schucher, A Ticking “Time Bomb“? ‒ Youth Employment Problems in China, GIGA Working Paper, No. 258, October 2014

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