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Tuesday, June 18, 2013 12:06 PM

Epic Glut of Graduates Depresses Wages; Fake Job Offers Taint Hiring Statistics

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In response to Pettis on China, Europe, Japan: Bad News for Those Looking for Growth reader "BC" passed on a series of articles about jobs and wages, and matching up graduates with the skills companies seek.

The articles are all in regards to China. Change the names and faces, and the stories sound to me like things you could easily read here.

The problems are universal: too many graduates, trained in fields where there are no jobs or few openings.

Job Prospects for China's Grads Bleak

Business Times says Job Prospects for China's Grads Bleak.

A record seven million students will graduate from universities and colleges across China in the coming weeks, but their job prospects appear bleak - the latest sign of a troubled Chinese economy.

Businesses say they are swamped with job applications but have few positions to offer as economic growth has begun to falter.

The Chinese government is worried, saying the problem could affect social stability, and it has ordered schools, government agencies and state-owned enterprises to hire more graduates at least temporarily to help relieve joblessness.

"The only thing that worries them more than an unemployed, low-skilled person is an unemployed, educated person," said Wei Shang-Jin, a Columbia Business School economist.

Lu Mai, secretary- general of the elite, government- backed China Development Research Foundation, acknowledged in a speech this month that fewer than half of this year's graduates had found jobs so far.

China quadrupled the number of students enrolled in universities and colleges over the last decade. But its economy is still driven by manufacturing, with a preponderance of blue-collar jobs.

Premier Li Keqiang himself led the Cabinet meeting on May 16 that produced the directive for schools, government agencies and state-owned enterprises to hire more graduates, a strategy that has been used with increasing frequency in recent years to absorb jobless but educated youths.

"Any country with an expanding middle class and a rising number of unemployed graduates is in for trouble," said Gerard Postiglione, director of the Wah Ching Center of Research on Education in China at Hong Kong University.
Mish Comment: Well, at least China's middle class is expanding, for now. That's not something we can say here in the US.

Fake Job Offers Taint Statistics

Forbes writes College Grads Are Jobless In China's "High-Growth" Economy
The semi-official Global Times reports that one of China’s hottest businesses at the moment is the forging of employment contracts for students.  Some universities, concerned about the withdrawal of funding due to high unemployment of their grads, will not hand out diplomas before students supply evidence of imminent employment.  The fake contracts, of course, inflate the statistics reported to—and eventually the figures issued by—central educational authorities.

“I just can’t figure out why it’s so hard to get a job this year,” wonders Miranda Zhang, who will graduate from a university in Beijing this spring.

The misery is spread over many fields.  English majors are having a hard time finding work, but so are those receiving degrees in law, computer science and technology, accounting, international trade, and industrial and commercial administration.  In short, Ms. Zhang and her classmates face a tight employment situation partly because the Chinese economy is in fact not moving fast in the much-discussed up-the-value-chain transformation.
Mish Comments: Are fake job offers in China that much different than the University of Phoenix placing someone with a culinary art degree in a job at McDonalds, while padding statistics as a graduate with a job in their field of study?

As for growth in China, forget about it. See the top link if you need convincing.

Chinese College Graduates Play It Safe and Lose Out

The Wall Street Journal reports Chinese College Graduates Play It Safe and Lose Out.
Xie Chaobo figures he has the credentials to land a job at one of China's big state-owned firms. He is a graduate student at Tsinghua University, one of China's best. His field of study is environmental engineering, one of China's priorities. And he is experimenting with new techniques for identifying water pollutants, which should make him a valuable catch.

But he has applied to 30 companies so far and scored just four interviews, none of which has led to a job.

Over the past decade, the number of new graduates from Chinese universities has increased sixfold to more than six million a year, creating an epic glut that is depressing wages, leaving many recent college graduates without jobs and making students fearful about their future. Two-thirds of Chinese graduates say they want to work either in the government or big state-owned firms, which are seen as recession-proof, rather than at the private companies that have powered China's remarkable economic climb, surveys indicate.

Mish Comment: Graduates want to work for State-Owned-Enterprises (SOEs), but SOEs in China are totally out of control, racking up debts that cannot and will not be paid back. SOE need to be dismantled, and they will be (with much pain).

The US equivalent would be hoping to get in on the public union pension-for-life gravy train just as the US public pension system is about to crash.

Employers and Graduates Mismatched

Marketplace.Org has Tales from a Shanghai job fair: Why China's college grads, employers mismatched.
Hundreds of HR managers carefully eye prospective employees who, resumes in hand, crowd the floor at a Shanghai job fair.

Here’s the problem: neither group is interested in each other.

Nicole Li is looking to hire college graduates for her property management company. “We need technicians to fix software problems, but college grads don’t have these skills," says Li, frowning. "We need people for exhibitions who can do presentations in English, but they can’t do that, either.”

Li needs to hire people for 60 high-skilled jobs. She says among the thousands of candidates here today, she’ll be lucky if she finds one.

Tong Huiqin comes to this job fair every Friday. He graduated from the Shanghai Finance University six years ago. Since then, he’s jumped from one job to the next. “It isn’t hard to find a job," says Tong.  "It’s hard to find the right job.”

Tong blames Chinese universities. He says they need to do a better job at preparing people for the country’s rapidly changing labor market.

I turn around and ask 22-year-old Wang Qianmin, who’s about to graduate from Shanghai Normal University with a teaching degree, what she’s looking for at the job fair. "I don’t know," she says with a pout. "Most of the jobs here aren’t really interesting. I’m looking for a company that’ll give me a high salary, money for meals and that’ll pay my rent -- a place where the working hours aren’t too long."

Wang says she wants to be a teacher. Or maybe a wedding planner. She can’t decide.

Mish Comments: These kids have no idea what they want to do, and they blame it on the school for not teaching them.

How is this different than the average liberal arts major in the US expecting the world at their doorstep just because they have a useless degree that prepares them to do nothing more than work as a part-time retail clerk, 25 hours a week, dumped into the Obamacare system?

Yet, we are told education is the answer, without ever addressing the questions "for who? at what cost? in what field?"

These articles were purportedly about China. Change the names and faces and the stories are not much different than you can find right here in the US, in Italy, in France, or anywhere else in a slow-grow global economy.

After growing at an astronomical rate for years, the cost of education is going to plunge. Job statistics will force that outcome.

Mike "Mish" Shedlock

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