n the first four months of 2023, China experienced strong economic recovery. On May 16, the United Nations increased its China growth rate forecast for 2023 to 5.3 percent, up from the 4.8 percent forecast in January. In April, stronger economic activities helped drive the urban unemployment rate down to 5.2 percent, from 5.5 percent in the previous month. However, the unemployment rate among youth between 15 and 24 remains high at 20.4 percent, up from 16.7 percent at the end of 2022.
Higher youth unemployment rates are a global problem, in some cases up to two or three times the overall unemployment rate. As many young people are entering the labor market for the first time, they lack knowledge and experience in areas such as job searching, career planning and career development, and there is often a mismatch between their education and the demands of the job market. It is a universal challenge for youth all over the world to successfully navigate the final stretch from school to the workplace. Second, economic recession hits young workers first while they are the last to benefit from economic recovery.
The structure of both China’s economy and its labor force exacerbates the problem. In China, there is a significant disparity in the level of human capital between urban and rural areas, as well as across different regions. As employment opportunities are predominantly concentrated in urban areas and more developed regions, rural youth and those from less developed areas face the dual pressures of having lower quality human capital and insufficient job opportunities. The structural and regional mismatch between supply and demand for youth labor poses a much greater challenge for China.
Additionally, as China’s economy is undergoing rapid transformation and upgrading, labor-intensive industries are declining, leading to a shrinking job market for low-skilled workers. Many young people who lack adequate education and training have failed to keep up with the transformation. In recent years, new forms of employment related to the emergence of social media, like livestreaming, marketing and making content, have played an increasingly important role in job creation. These are often the first jobs that many young people do. However, these new forms of employment lack protection and job stability. Frequent job hopping among workers in these forms of employment further contributes to the elevated youth unemployment rate.
To address the problem of youth unemployment, China needs to focus on improving the level of human capital for the young and ensuring their skills better match what the market needs. Apart from reforming the education system to ensure more integration with the market, the government should establish a training system specifically targeting young people, empowering them to become competent workers.
To address the crucial issue of the last mile between schools and the labor market, it is necessary to establish and improve mechanisms and institutions. It is recommended that the government steers schools to establish specialized career guidance teams and encourage human resource service companies to provide appropriate support for youth employment. The government should also provide strong incentives, such as subsidies for recruiting and training.
Research indicates that the impacts of unemployment for young people entering the job market for the first time have long-term effects on their performance. The government should make creating job opportunities for young people a top priority.