China's college graduate glut

Employment & Education

By Chi-Chu Tschang

June 5, 2007 

With China's economy still at high speed and corporate profits and
wages on the upswing, this should be a golden time to be a newly minted
university graduate. After all, multinational corporations have been
complaining that they can't find enough qualified people to hire.
Factories along the coastal regions have been hit by a shortage of
migrant workers.

But guess what? For college seniors graduating this spring, finding
a job has been a real struggle. There are simply too many of them to
absorb even for a growing economy like China. Just ask Yang Hanning,
who will be graduating with a degree in computer science from Tianjin
University of Commerce in July. He has sent out dozens of résumés and
been called back for an interview for fewer than 10 companies. He has
yet to receive a job offer.

"All of the jobs I've applied for are looking for people with
experience. They give us recent graduates the cold shoulder," Yang, 23,
laments. In fact only three out of his 22 classmates in the computer
science department have received job offers so far, and none of the
jobs has anything to do with their major.

Cutthroat job market

In 1977, the first year that Chinese university enrollment resumed
after the trauma of the Cultural Revolution, only 4.7% of applicants,
or 270,000 students, were accepted into college; a carefully managed
trickle. And those lucky kids generally coasted into a stable job in a
government ministry or state-owned enterprise. It was the fabled era of
the "iron rice bowl" in which college grads received subsidized housing
and rock-solid job security.

China's evolution since then into a more market-driven economy has
also meant a far more cutthroat job market. This spring, 4.95 million
seniors will graduate from colleges across China, nearly five times as
many college graduates than China produced seven years ago.

"There are a lot of people in China. Everybody has a college degree
and they're all competing for that one opening," said Liu Chao, 21, who
will be graduating in July with a degree in computer science from
Beijing Information Technology College. The joke floating around
college Internet chat rooms is that college students nowadays are like
cabbages: There's an abundant supply of them and their price never goes
up.

Flood of unemployed

The reason universities are churning out record numbers of graduates
every year is rooted in the Chinese government's decision to expand
university enrollment starting in 1999. With the Chinese economy
slowing during the Asian financial crisis, Asian Development Bank
economist Tang Min in 1998 proposed expanding university enrollment to
boost domestic consumption. China was closing down state-owned
enterprises and laying off millions of workers at the time, so it
seemed like a good idea to send some of the 3 million high school
graduates in 1999 to college and delay their entry into the job market.

Today it is unclear exactly how many recent college graduates are
unable to find a job. Since 2001, the official figures from the
Ministry of Labor and Social Security (MOLSS) claim that roughly 30% of
college seniors have not signed an employment contract by the time they
receive their diplomas in July, which is a typical number for the U.S.
and other developed nations. In China, however, that would mean nearly
1.5 million recent graduates will be flooding the job market this
summer.

"The MOLSS tabulates the unemployment figures for blue collar
workers and doesn't really care about white collar unemployment.
College graduates are white collar. The MOLSS doesn't know how many of
them are unemployed and doesn't care," said Yao Yuqun, professor at
Renmin University's School of Labor Relations and Human Resources. He
added that unemployed college graduates are not counted in China's
official 4.1% unemployment rate.

Spoiled only children?

However there is anecdotal evidence to suggest that it is a growing
problem that has attracted the government's attention. Last November, a
graduate student from the prestigious Tsinghua University committed
suicide because he was unable to find work. Starting last year, college
graduates who have been unable to find work by Sept. 1 have been
allowed to register as unemployed with their local government offices
and receive unemployment benefits.

Older Chinese complain that the current crop of college graduates
born in the 1980s under the one-child policy have been coddled by their
parents. Unlike their parents who dutifully went to work wherever the
state assigned them, this generation of Chinese are pickier about where
they live and where they work.

"Some college graduates will only work if they find a good job. If
it's a regular job, they won't do it," noted Sun Baohong, head of the
Shanghai Academy of Social Sciences' Institute of Adolescents.

Please stay home

College graduates expect to land nice white collar jobs after
graduation. The reality is that China's economic growth is still
largely driven by factories needing cheap, low-skilled workers churning
out products for export. Hence, chief executives complain that they
receive a mountain of résumés for administrative positions but are
having a hard time filling openings on the plant floor.

Most college graduates have also shunned the countryside and flocked
to China's major metropolitan areas, such as Beijing, Shanghai, and
Shenzhen, to find jobs. The government has been trying to entice
college graduates to spend a year or two working in rural areas after
graduation by giving them bonus points if they apply to graduate school
later. But young Chinese say that one reason they prefer to go to major
cities to find work is because they feel the playing field is more
level there, unlike in the countryside where "guanxi" or connections
are needed to find jobs.

Companies say that China's educational system, which stresses rote
memorization, turns out college graduates who can perform repetitive
tasks efficiently but cannot think "out of the box" to attack problems
creatively. Often college graduates simply can't do jobs they are hired
for without further post-graduate training.

Experience worth the price

A European startup working on applying artificial intelligence to
business cases moved its research and development operations to Beijing
last year to take advantage of the cheap cost of Chinese software
programmers and found this out the hard way. It originally posted job
advertisements on the Internet and hired seven recent college graduates
only to discover that some of the programmers were unable to write
simple computer programs.

In February the company decided to start over from scratch. This
time it hired a headhunter to find programmers with 5 to 10 years of
experience. Even though it costs up to 10 times more to hire
experienced programmers, as opposed to hiring fresh college graduates,
the decision turned out to be worth it. "Of course the salary is
different but you don't have redo their work and the work is higher
quality. They would probably be actually cheaper than hiring fresh
college graduates," said Nicolas Piguet, co-founder and R&D manager
of the startup.

To be sure, many recent college graduates are aware of their
shortcomings. They cite training and room for career advancement as one
of the main factors when choosing where to work. "A lot of companies
neglect career training. I don't get the feeling that I would learn a
lot at these companies," said Jia Zhanjie, 24, who will be graduating
with a degree in chemistry from Beijing Normal University. Even though
he already has a job offer, he was still trolling job fairs on the
weekends to see if he could find something better.

Limiting number of students

Not surprisingly, more and more college students are going to
graduate school before entering the workforce. "After I return with my
master's degree, it'll be easier to find work," said Luo Binhan, 23,
who graduated with a degree in insurance from Wuhan University in 2005
and has taken the past year off to apply to graduate school overseas.
However in the last couple of years Chinese students with graduate
degrees have also found it harder to find work.

The Chinese government has started to take steps to improve the
quality of education. The central government will invest 10 billion
yuan ($1.3 billion) between 2006 to 2010 in vocational and technical
schools to create more skilled workers. With factories facing shortages
of skilled laborers, 95.6% of vocational school graduates had a job
offer by the time they graduated last year.

Last year, the Ministry of Education also began to limit the number
of incoming freshmen universities could accept to no more than 5% more
than the year before. The rapid expansion of college enrollment had led
to a shortage of qualified professors, leading to a drop in the
standards. Renmin University's Professor Yao said, "A lot of people
have been complaining to the Ministry of Education that their children
can't find jobs. Expanding university enrollment has lost its
attractiveness."