SHANGHAI, July 16 — At a job fair for soon-to-be graduates in central Shanghai, recruiters sat bored under washed-out tarpaulins as rain and an apparent lack of interest kept potential young employees away.

The empty seats belied China’s stubbornly high youth unemployment rate — a problem so pressing that President Xi Jinping has told top Communist Party (CCP) cadres it should be a "top priority”.

His words have been seen by many analysts as a signal that reforms could be in the pipeline ahead of the ongoing Third Plenum, a meeting that has historically unveiled important changes in economic policy direction.

Youth unemployment stood at 14.2 per cent in May, official data showed — and last month, another 11.8 million students graduated from university, adding to the bottleneck.

That number had soared to an unprecedented 21.3 per cent in mid-2023 before officials paused publishing monthly figures. They began releasing them again in December after adjusting the calculation method.

Hospitality and human resources firms dominated the small job fair in late May, one of many hosted by local authorities in anticipation of an influx of university leavers.

"It’s difficult to find a job that matches your degree and aspirations,” one of the few young jobseekers at the fair, a data sciences student, told AFP.

"Lots of college students actually have too high expectations,” said Julia Shao, who was recruiting for a restaurant chain.

"They do not prefer this kind of basic position. They prefer... a fancy job.”

‘Policy shift under way’

Xi specifically mentioned graduates in a speech to the CCP Politburo in May, noting that "more jobs should be created for them to apply what they have learned and what they are adept at”.

His remarks follow "a steady drumbeat of comments from China’s leadership underlining the urgency” of the matter, Erica Tay, director of macro research at Maybank, told AFP.

The issue has been hanging over the government for some time.

Together with persistently low consumption and a long-running property sector crisis, the unemployment situation has been labelled a key culprit for China’s uneven post-pandemic recovery.

"While details in Xi’s comments are vague, it’s clear a policy shift is under way,” said Harry Murphy Cruise of Moody’s Analytics.

"We expect policies aimed at reducing youth unemployment to be a key pillar of the discussions (at the Third Plenum).”

Xi has said young people should be encouraged "to find jobs or start businesses in key fields (and) industries”.

"Market-oriented and social channels should be expanded for young people to find a job,” he was quoted as saying.

Murphy Cruise said he expected the government to increase wage subsidies to persuade companies to hire recent graduates, as well as create more work placements for students.

However, these were only "band-aid solutions”, he said.

In the long term, "larger industrial and education policy reforms” were needed to ensure a better match between graduates’ skills and employer demands, he said.

‘Lower expectations’

There is now a push to fill roles that "dovetail with key policy priorities” or where skills shortages exist, said Tay, like industrial upgrading and scientific innovation.

With job opportunities drying up for those holding sociology, journalism and law degrees, she said, some kind of "government-sponsored earn-as-you-learn training programmes” might be needed to fill more in-demand roles.

Near the law faculty of a top Shanghai university, final-year students said the job market was indeed tough.

"Post-pandemic, it is a little more difficult than before,” 22-year-old Qian Le said, referencing recent layoffs and pay cuts at top Chinese law firms.

"Even those who are already in jobs may not be able to keep them, so it may be more difficult for new people to get in.”

Qian and her classmate Wang Hui had both opted to pursue further study.

"The economic situation is quite sluggish, many companies have gone bankrupt, and many jobs have been reduced,” Wang told AFP.

China’s once-freewheeling private sector has slowed significantly, in part because of past government crackdowns on companies including tech giants and private tutoring firms.

Many young people are opting to study for civil service exams — seen as a more stable option — or like Wang and Qian, taking on post-graduate degrees.

In March, universities urged their students to actively look for jobs instead, said Tay.

But "competition is huge, and the number of undergraduates is gradually increasing every year”, Wang said.

Karl Hu, another law student, said the difficulty was not in finding a job.

The problem was finding "a suitable career” in terms of salary level and benefits, he explained.

He himself had secured a good job at a bank, he said — but many would have to "lower their expectations”. — AFP