Now College Grads Can't Find A Job

With more and more Chinese attending university, they're facing frustration when they get out

If any student trying to enter the workforce in China should have an easy time finding a plum job, it's Wang Zhaohui. In July, the 30-year-old graduated from China Agricultural University in Beijing -- China's top agriculture academy -- with a PhD in biochemistry and molecular biology. That makes him well-positioned to take advantage of the government's drive to upgrade its competitiveness in science and technology. But for months now, Wang has been seeking a position with a university, research center, or biotech company -- and has had no luck. He says many classmates are having similar trouble. "I am so disappointed," he says, adding that his hoped-for salary of $725 a month might be unrealistic. "I have already lowered my expectations, and I may have to lower them further."

Around the world, it's hardly unusual for people fresh out of university or graduate school to have trouble landing a job. Until recently, though, China was the exception. For many years only the top 4% of China's students could enroll in college, and there were plenty of white-collar jobs to go around. But since the late 1990s public universities have undergone rapid expansion both on their main campuses and satellites around the country. People's University, Beijing Normal University, and China Medical University have all opened campuses in the booming southern city of Zhuhai. Private-sector schools, both Chinese and foreign, have also proliferated.

With all this expansion, more than 17% of the country's college-age students can now find places in universities. The number of university graduates has exploded from 1.5 million in 2002 to 2.8 million this year. In 2005 the system is expected to produce 3.4 million. "China has taken off like a rocket," says Mark Bray, dean of the education faculty at the University of Hong Kong. "There are huge numbers of graduates coming out of the pipeline."

The problem is that even in China, the world's fastest growing economy, there aren't enough jobs for so many graduates -- and President Hu Jintao and Premier Wen Jiabao have a new kind of production overcapacity to grapple with. On Sept. 28, Lin Huiqing, director of the Education Ministry's college students department, told reporters that some 30% of this year's grads are unemployed and that the increase in graduates was aggravating an already difficult job market.

Economists estimate that the jobless rate in China's urban areas ranges between 8% and 10%, with many of the unemployed workers coming from uncompetitive state-owned enterprises in China's rust belt that have been shut down. Labor activists in Hong Kong say that disgruntled workers are striking to protest the privatization of their companies. For instance, 7,000 Chinese textile workers near the ancient capital of Xian walked off their jobs on Sept. 13 after the new owners of their factory cut wages and benefits.

The government is keen to prevent this blue-collar anger from spreading to the ranks of college graduates -- especially since China has a history of intellectuals taking the lead in social protests. Students were at the forefront of the 1989 Tiananmen Square protests, for instance.

Admittedly, university campuses in China today are hardly hotbeds of political activity. "The days when students and intellectuals acted as a tinder in society are a bit passé," says Robin Munro, research director at China Labour Bulletin, a worker-rights publication in Hong Kong. Nonetheless, the Education Ministry is eager to get unemployed college graduates into the workforce fast. The ministry is urging jobless grads to start their own companies, with some local governments offering loans to give a hand to would-be entrepreneurs. Young grads are also being urged to join Hu and Wen's campaign to spread prosperity to the interior. Last year the Education Ministry and the Communist Youth League launched a Peace Corps-like program to send recent graduates to impoverished regions in western China. According to the Chinese press, over 10,000 volunteers have signed up for this Go West program.


Moving to the boondocks isn't a practical solution for most graduates, however. Having made it through university, they want to live in comfort and make good money working in places such as Beijing, Shanghai, or Shenzhen. "There is much more opportunity to develop myself in a big city like Beijing," says 27-year-old Zhang Jing, who recently earned a degree in journalism at the Beijing campus of the Communication University of China but has a temporary job as a teacher for $100 a month. "The salary and work conditions are usually much better than in small cities."

The big cities are also where the big-name local companies and blue-chip multinationals are located. Problem is, while such employers badly need experienced managers and researchers, they "are not coming [to China] for fresh graduates," says Jun Ma, an economist with Deutsche Bank (DB ) in Hong Kong. He points out that while there is great demand for engineers and managers with several years' experience, new grads are a dime a dozen. And even when companies make places for them, there is more supply than demand. Last year Oracle Corp. (ORCL ) announced that it would hire 23 new grads for its software development centers in Beijing and Shenzhen. More than 4,800 applied.

The graduate glut is one more sign of how difficult it is for China to manage a smooth transition to a market economy. Not too long ago, college graduates who did not land jobs in the nascent private sector were virtually guaranteed spots in government ministries or state-owned enterprises. With agencies and SOEs slimming down, those easy berths aren't available in great numbers any more.

What's more, Beijing may have unwittingly compounded its problem: It increased college enrollments partly as a way to keep a rising tide of high school graduates from flooding the labor market too early. That move postponed the employment problem for many of China's young people but did nothing to solve it.

Of course, in the long run, expanding the college student population is a key to development: China's huge supply of young, educated workers is crucial to its drive to achieve First World status. And even with 17% of its college-age people in school, China lags behind industrialized countries, where the proportion is 40% or more. Over time, making it easier for people to go to university will help upgrade the workforce, as cities such as Guangzhou shift away from labor-intensive manufacturing and develop their service industries.

For now, though, people like Wang are growing impatient. Wang says he's thinking of leaving China for a postdoctoral position in the U.S. "It is proving not worth the time or energy to search for work in China," he says. Of course, with visas to the U.S. increasingly hard to get, that's not necessarily an easy way out, either. China's college-educated elite can count on more frustration as they search for the jobs that match their skills.

By Bruce Einhorn in Hong Kong and Dexter Roberts in Beijing

    Before it's here, it's on the Bloomberg Terminal.