China’s central government released a guideline aimed at creating jobs on September 26, as the economic slowdown has led to rising unemployment. In August, youth unemployment reached 18.8 percent, the highest since the government excluded graduate students from the figures in December 2023.
According to the guideline, an employment-first strategy will address structural contradictions, deepen institutional reforms and improve both the quality and quantity of employment. As the first central government policy package aimed at creating jobs since 2012, the guideline states that a top priority of China’s economic and social development will be “high-quality and full employment.”
China’s job market faces structural challenges such as a rapidly aging population. Efforts to promote industrial upgrading and a green economy transformation mean a shortage of skilled talents in emerging industries, while there are labor surpluses in traditional manufacturing and service industries.
There is a mismatch between supply and demand in job markets across different regions. While the aging population problem in first-tier cities and the prosperous east coast is more serious, there are also more job opportunities in big cities, leading to highly competitive job markets. Smaller cities, along with less developed central and western regions, face a less serious aging population problem, but have fewer job opportunities.
A similar mismatch exists between the skills demanded by the job market and what young people study at school and college.
The guideline appears to include measures that go in the right direction. One measure is to push the higher education system to align itself more closely with job markets. Universities are encouraged to expand enrollment in the sciences, engineering, agriculture and medical programs, fields that are deemed more useful for the development of new quality productive forces.
Chinese universities have already started to phase out programs with poor job prospects. As of August, 99 degree programs in 19 institutions were suspended or discontinued. Employers will be encouraged to set up vocational schools, and they will be required to spend at least 60 percent of their training budgets on skills training for frontline workers.
The government should also make efforts to encourage businesses to establish branches in smaller cities by improving infrastructure and offering preferential policies. Local government officials are required to prioritize projects with “strong job creation potential” when assessing bids for land development schemes.
More efforts should also be made to support small- and micro-enterprises, which account for the bulk of employment. The government can establish special funds and provide loan support to lower the financial costs for small businesses and encourage them to expand and increase hiring. Local governments should leverage their unique characteristics, historical and cultural heritage and geographical advantages to generate more employment by creating opportunities in logistics, agriculture and tourism.
The policy document also states that the government will “improve the employment impact assessment mechanism” to “synchronize evaluation of job creation and unemployment risk.” As the structural problems of China’s labor market are likely to be a long-term issue, it is essential to leverage big data from recruitment platforms to establish a monitoring and impact assessment mechanism to help predict future employment trends and provide forward-looking guidance for macro policy adjustments, and for talent development in universities and educational institutions.
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