It’s estimated that 7.95 million graduates will get their diplomas this summer, a historical record. Yet, as the economic slowdown persists, many analysts have predicted that this year could see the worst odds for college graduates to find a job. This isn’t just about jobs; it’s a sign of a general anxiety among China’s middle class. In the past three decades, as the Chinese economy boomed, education became the major means of social mobility. A college degree was seen as a ticket into the growing middle class.
And as the economy grew, Chinese colleges and universities greatly increased enrollment. The number of college graduates increased from under a million (950,000) in 2000 to almost 8 million this year.
But as double-digit growth passes into history, the future prospects of the middle class, once taken for granted, are now in question. The idea that a college degree or diploma guarantees a middle class life may soon be history too. According to a survey conducted by Zhaopin, one of China’s major online job boards, the average monthly salary of fresh graduates this year has dropped by 16 percent compared to last year, to 4,014 yuan (US$590). It is the second consecutive year to see a drop in fresh graduates’ starting salaries, unprecedented in previous years.
If the trend continues, many of China’s college graduates may find themselves excluded from the middle class. From a national perspective, this could mean the start of the shrinking of the middle class, which would have serious social and political implications for Chinese society.
According to the same Zhaopin survey, the percentage of college students who said they would pursue more advanced education dropped precipitously from 21.3 percent in 2016 to 9.7 percent this year. The reason may be an expectation that the job markets will worsen in the future, and so graduates want to start climbing the career ladder earlier. The survey also found that two-thirds of college students weren’t able to secure the salary they expected.
Many economists believe the potential employment problems faced by college students, in a time of continued economic slowdown with widening income gaps and sharp increases in the cost of living, especially for family and housing, may lead to the collapse of China’s newly emerging middle class.
The government must not take this issue lightly. It needs to better match the educational system with the job market. Given that the greater share of China’s colleges, including top institutions, are public ones, the government should be more proactive. In the past, the focus has been on bumping enrollment. But now it should shift to better preparing students for the job market. As China is trying to restructure its economy for more sustainable growth, it needs to better connect higher education and industrial development. Moreover, as middle-class incomes may stagnate or even recede in the next few years, the tax code, which puts a disproportionately high burden on the middle class, has to be adjusted to help them cope with the new economic reality.
For years, economists have warned that China’s biggest challenge is avoiding the “middle-income trap.” But what that really may be is a “middle-class trap.” Making sure the country has a healthy and stable middle class should become a top priority.