Young workers and job seekers, who often spend more of their income as they are just starting out, are struggling.
By guest author Nathaniel Taplin from the Wall Street Journal
What is holding back China’s economic recovery, particularly in services and consumption?
There are many answers, but one important piece of the puzzle is starting to become clear: Young workers and job seekers, who often spend more of their income since they are just starting out, are struggling. Until that is rectified, regaining China’s pre-pandemic consumption-growth trend could be challenging. Online movements springing from youth discontent such as “tang ping” or “lying flat,” which was started by a disenchanted former factory employee and rejects overwork, may be difficult to fully suppress.
Some of the factors weighing on China’s recovery are clearly temporary—particularly the recent coronavirus outbreak in Guangdong province, which shut down Shenzhen’s Yantian port, one of the nation’s largest. But the rise in youth unemployment, which initially appeared to be a temporary consequence of the pandemic, is starting to look more durable.
The surveyed unemployment rate among 16-to-24-year-olds was 15.4% in June, up from 12.3% in December and barely below the record high of 16.8 % reached in July and August of last year. Overall unemployment, meanwhile, has continued to trend down. The rate among 24-to-59-year-olds was only 4.2 % in June, down from 5.6 % in early 2020 at the height of China’s initial outbreak.
Some of this is clearly seasonal: New high school and college grads enter the workforce in the summer after they graduate. But a look at the youth unemployment trend heading back to the beginning of the new unemployment survey introduced in the late 2010s highlights a more worrisome trend. In 2018 and early 2019, youth unemployment never rose above 13.3% and tended to bounce around 10 % or 11 %. Since mid-2019, it has never fallen below 12 %.