Youth unemployment in China has stayed stubbornly high, even as the overall urban unemployment rate continues to improve with the reopening of its economy.
Joblessness among 16- to 24-year-olds in April increased to 20.4%, roughly double the age group’s pre-pandemic level in April 2019, Goldman Sachs economist Maggie Wei writes in the team’s report.
Cyclical factors are only part of the story
Young people tend to be particularly vulnerable during economic downturns, most likely due to a lack of work experience. This tendency has been amplified by the pandemic, which was particularly tough on services industries that tend to hire more young workers.
Skillset mismatches help explain higher than normal joblessness
Goldman Sachs economists find that mismatches between the skills graduates acquired from higher education and those required by employers are likely contributing to the abnormally high rate of joblessness.
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It may take some time to bring youth unemployment back down
Goldman Sachs Research estimates that the country’s services recovery could lower youth unemployment by 3 percentage points in the current quarter, but the strong supply of young workers caused by graduation season could cause the rate to rise by 3 to 4 percentage points this summer, before starting to decline in the third quarter. Closing the structural mismatch in skillsets will likely be a longer-term task.