Youth employment and wage trends in China

Younger people and new graduates have a tougher time finding work than their more established, older counterparts; this is the case in China as it is in many countries.

We've charted the unemployment rate in China's major cities and broken it down into age cohorts. (The methodology changed in 2023, accounting for the gap in the chart; students were excluded, and the age 25-29 cohort was broken out as a separate category from older workers.)

Youth unemployment has taken an uptick since June, and was approaching 19% in August. Meanwhile, overall urban unemployment has stayed steady just above 5%.

The urban employment rate is especially relevant in China for its wider macroeconomic significance. As our second chart shows, there is typically a close correlation between the growth rate for China's industrial value-added output and the growth rate for urban employment. The Covid-19 shock and post-pandemic recovery for both metrics can clearly be seen.

Next, we examine how the job market has been in flux as Chinese industries move up the value chain. High-tech industries such as electronics and automotive have seen a notable increase in employment; as a share of the job market, traditional manufacturing and resource-based industries have declined. Higher skill requirements in new industries pose a greater (if perhaps temporary) hurdle for younger workers with limited experience to clear.

On a global basis, Chinese workers are notable for putting in some of the longest hours -- as our fourth and fifth charts show. Like their South Korean and American counterparts, wages have steadily improved, but China's workers typically put in 45-hour weeks, compared with about 35 hours in the US.

(South Korea is notable for converging with US working hours after working even longer weeks than Chinese 25 years ago. Meanwhile, the cluster of developed markets in the middle of our chart shows the relative wage stagnation compared with the US.)

We conclude with a chart tracking the importance of wages and salaries (and, thus, consumption) to overall GDP in China. These ratios declined from 2000 and bottomed out in 2010 as exports boomed; they have since recovered as rising incomes meant Chinese workers were able to spend more on leisure and other discretionary goods and services.

In the long term, improving the quality of employment in China will be key to driving sustainable growth in consumption.

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