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Graduate employment in China shares similar attributes with the international graduate labour market. For instance the change of occupational structure (Elias and Purcell, 2003), under-employment, the mismatch between the experience of higher education and desired occupational professions (Tarsh, 1992; Dolton and Makepeace, 1992; Belfield et al., 1997), and the potential devaluation of HE qualifications as a result of rapid expansion (Purcell et al., 2005). Aside from these more internationally recognisable features, China’s labour market also has very peculiar features and problems of its own, which result from its specific history and economy. Given the sheer number of graduates produced every year (see above), questions have been raised over whether China’s labour market has the ability to absorb such a large number of graduating students and whether Chinese graduates are adequately prepared to enter the labour market.

First of all, the ‘Chinese College Graduates’ Employment Annual Report 2012’ (MyCOS, 2012), which is based on 227,000 questionnaires retrieved from newly graduating students in 2011, investigated the employment status of graduates within six months of leaving university. It shows that the overall employment rate of new graduates in 2011 is 89.6 per cent, which is higher than 86.6 per cent in 2009 and 85.5 per cent in 2008. It is even higher than the pre-financial crisis era (87.5 per cent) in 2007. Graduates who studied Engineering achieve the highest employment rate (93.3 per cent), whereas graduates from Law suffered the lowest

rate (86.7 per cent). The average monthly income2 for graduates in 2011 after six months of graduating is RMB 2479, RMB 349 higher than in 2009. The most substantial increase occurred in the cohort from ‘211’ universities, whereby income increased by RMB 649 compared to 2009. The increase of income can be seen resulting from both the large demand of the labour market as well as inflation. In terms of subject area, the highest income is found among graduates from

Economics (RMB3023/month) and Engineering (RMB 2953/month), while the lowest salary is made by graduates of Education (RMB2491/month). The most popular type of job is sales (12 per cent), which is followed by

accounting/auditing/taxing (9.6 per cent) and finance/banking/securities (8.8 per cent).

Although the MyCOS report shows a rather positive situation regarding the employment rate of graduates in China, it also shows that 34 per cent of graduates left their jobs within six months after graduation, mainly because of a mismatch between their expectations and the reality of the occupation, compounded with a lack of interest. Considering such a high rate of termination of graduate labour contracts, and within only half a year of graduation, the ability of the Chinese labour market to absorb graduates has been placed in doubt. Given the high turnover rate, MyCOS (2012) suggested that changing jobs frequently is not very beneficial for one’s career development. Based on survey samples of those who graduated in 2007, they came to the conclusion that three years beyond graduation,

the more employers one had, the less income they made. The result of graduates in 2007 shows that those who stick to one employer make the highest income

(RMB5463/month), while those who changed employers for five or even more times make the lowest income (RMB4624/month). Nevertheless, this survey result only sees a three year difference, which is a rather short period of time and the first three years could be very unstable for graduates in the labour market. Secondly, it only evaluates career development within the perspective of financial benefit. Some other benefits, such as training opportunities have not been covered.

Other Chinese scholars have suggested that changing jobs within three years after graduation would help them to form a better plan for their career development. Zhang Libin, a researcher from the Labour Study Research Institute (an academic institute subordinated to the Ministry of Human Resources and Social Security) took this standpoint during an interview with a journalist from the website China’s Employment3 (Zhao, 2013). She suggested that shifting between jobs was a very common social phenomenon for graduates. Although graduates learn academic knowledge and skills from universities, they still lack practical understanding of society. According to her, it takes at least two to three years of experiencing the real society before they can settle down and adopt a stable path. During this process of switching between jobs, they will find their own position in the society and in turn

3

China’s Employment Website (formerly China’s Labour Market Website) is established by the Ministry of Human Resource and Social Security, in collaboration with China Employment Training Technical Instruction Centre.

develop a clear career plan.

In contrast to the positive employment rate shown in the MyCOS report (2012), some scholars are worried that China is facing an imbalance between labour supply and demand (Fladrich, 2006; Sun and Zhou, 2010), whereby graduates are now confronted by fierce competition in the changing and challenging labour market in China (Lau and Pang, 2000). Take Beijing as example, according to the ‘2012 Third-quarter Human Resource Supply and Demand Investigation Report’ from Beijing Human Resource and Social Security Bureau, there is an oversupply of graduates holding Bachelor degrees in the Beijing labour market.

Figure 2-2: Mismatch between demand of labour market and the supply of HE 2012

Source: Beijing Human Resource and Social Security Bureau (2012)

Figure 2-2 shows that oversupply occurs among PhD as well as Bachelor degree holders. By comparison, there is a significant shortage of human resources at the lower end of the education spectrum. It should be mentioned that data from this report is generated from only employers and job applicants who registered with the

0 10000 20000 30000 40000 50000 60000 Middle school or below High School Vocational College Bachelor Degree Master Degree PhD Demand of the Labour Market

public human resource institutions in Beijing. Thus those organisations, as well as individuals, who recruit and job hunt independently from local institutions are not being calculated (a huge cohort). However, the result of this report could still indicate a competitive trend in graduate labour market.

The oversupply of graduates is not the only thing that worries academics. Another source of contention is the quality and employability of graduates. This has been raised as a significant issue for the HE, especially in terms of the labour market. In 2007, 4.5 million students graduated from HEIs in China. However Farrell and Grant (2005a, 2005b) argue that few of them are capable enough from the

standpoint of those employers in international business. Although there is no clear definition of what makes a graduate student suitable to the labour market in their articles, there are some general areas they point to: practical experience in projects or teamwork; foreign language skills (especially English); communication skills; and a level of understanding of other cultures. They suggest that the low suitability of Chinese graduates results mainly from their lack of quality and lack of mobility. University rankings play a crucial role in China’s labour market, and graduates from top universities are considered better educated and more suitable for the labour market due to the rich resource they received from top universities (Ripmeester, 2004). However, less than one third of the 1.7 million graduates in 2003 studied in top 10 university cities4 (Farrell and Grant, 2005b), which implies

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10 university cities in China: Beijing, Shanghai, Wuhan, Guangzhou, Xi’an, Tianjin, Changsha, Nanjing, Zhengzhou, Chongqing, which based on city’s population and its share of colleges. See also, Farrell, D. and Grant, A. (2005b) ‘Addressing China’s Looming Talent Shortage’ McKinsey Global Institute and McKinsey & Company’s China office.

that only a small proportion of the graduates are likely to be considered as highly qualified candidates for China’s labour market. Secondly, a lack of mobility is evident from the low interprovincial flows of Chinese graduates. Farrell and Grant (2005b) point out that those who move to other provinces for work constitute only around thirty per cent of all Chinese graduates.

Although the research done by Farrell and Grant in 2005 provides a relatively sound analysis of problems to do with graduate employment in China, there are three weak points in their studies. Firstly, they never defined the term

‘employability’ properly. In the ‘Chinese College Graduates’ Employment Annual Report 2012’ (MyCOS, 2012), it defines employability in two parts: general/basic working ability (基本工作能力) that applies to all kinds of jobs, and

specialised/professional ability (职业工作能力) for each different post in certain

fields. It takes over ten thousand measurements to evaluate the

specialised/professional employability of graduates in 721 different posts. In addition, in order to test the degree of the general/basic employability, the survey also uses 35 measurements, such as oral communicational skills, learning skills, and scientific analysis skills, and for each measurement it ranges seven levels from the lowest 1/7 to one (the result works out as a percentage). In the end, it also reaches the conclusion that the general/basic employability of new graduates (53 per cent) cannot reach to the standard required by the employers (62 per cent).

universities in China were highly qualified candidates for the labour market, with no evidence to support this claim. That said, research about the graduate labour market conducted by Hartog et al. (2010) can be used to back up this assumption to a certain degree. In terms of earnings and university rankings, their study examined over 2,200 participants from 12 provinces who received a university bachelor degree. 250 of the universities these participants graduated from are ranked from one to 500 in China. The results show a positive correlation between university rankings and earnings of graduates. The results also show that graduates from the top 100 universities earn 23 per cent more than those who graduated from a university that ranks between 400 – 500. Yet there is no substantial difference within the top 100, indicating that university ranking can be considered as a signifier of the quality of their graduates.

Thirdly, Grant and Farrell suggested that the immobility of graduates contributes to the mismatch between supply and demand in the labour market. However, some researches show that the employment problem is focused on the imbalanced distribution of graduates rather than their mobility, or lack-there-of. To be more exact, most of the graduates would opt for the east coastline to pursue a career path, for example in Beijing, Shanghai and Guangzhou (‘Bei Shang Guang’ in short). These well-developed, first-level megacities are thought to contain much better prospects in terms of resources and job opportunities for graduates. On the other hand, according to the Chinese Graduates Employment Annual Report 2012 (MyCOS, 2012), the middle-west area is the least attractive place for employment.

Only one third of the graduates who are originally from the mid-west would like to stay in their hometown. The result of this graduate employment survey (MyCOS, 2012) would then suggest that it is not immobility, but rather the imbalanced distribution of graduates that is creating concern about employment.

Regarding the graduate labour market, two issues contribute to the problems of graduate employment: the reform of China’s human resource management (HRM) and the reforms in HE. First of all, China’s labour market has seen a sharp shift from job assignment by the government to individual responsibility for one’s own career management. Before the Open Door Policy at the end of the 1970s,

university graduates were assigned a job by the government according to state planning. That was regardless of personal preferences. By sacrificing one’s personal ability to choose and determine their career path, job security was

guaranteed for all graduates. However, this policy led to several negative effects in terms of academic achievement, a substantial mismatch between education and employment, workforce mobility, and general productivity (Fladrich, 2006). Therefore, and in order to meet the needs of a new kind of market-oriented economy, job assignment and labour allocation by the state, as well as life-long employment, have all since been replaced by a competition-based labour

marketplace. As a result, Chinese graduates are now forced into fierce competition with one another, and are required to take responsibility for their own ‘career self-management’ (Lau and Pang, 2000: 145).

Secondly, the low suitability and employability of Chinese graduates are to a large extent due to the weakness of the HE system in China. Chinese HE prioritises theoretical knowledge over practical experience. This method of student cultivation in China’s educational system is usually called ‘duck feeding’ (Tianya in Chinese), and students are expected to memorize a huge amount of information and then provide the right answers in examinations. This eschews the practice of building up knowledge by themselves or solving problems through teamwork (Mohrman, 2003). Obedience, diligence and good behaviour are valued more highly than creativity, innovation and critical thinking. Thus a negative feature shared by Chinese graduates is a lack of creativity, critical thinking, problem solving skills, and oral presentation skills (Sato, 1982; Volvet and Renshaw, 1999).

However, China’s increasing level of engagement and integration in the world market requires labour to meet global standards which not only focus on

professional knowledge, but also on soft skills such as creativity, communication skills, critical thinking and teamwork. Hence the shortfalls in China’s education system have negative ramifications for the employability of the supply of university graduates in the labour market. In addition, a well-functioning career service system is still missing in HEIs in China, which would otherwise equip students with a career strategy and help them to plan for the labour market (Lau and Pang, 2000).

Given the problems surrounding China’s graduate labour market, Farrell and Grant (2005b) suggest some possible solutions from the perspective of universities,

companies and government. First of all, higher education deserves more investment and funding should concentrate on raising quality rather than quantity. As Heckman (2002) points out, compared to the investment in physical capital (30 per cent of GDP), China’s investment in human capital only takes 2.5 per cent of its GDP, which is below average and even lower than China’s peers such as south Korea (3.7 per cent). Although there has been a rapid increase in expenditure for tertiary education, there has been an even more rapid growth of the number of students. Therefore, the expenditure per student has fallen in recent years. In addition, funding should be distributed evenly throughout the country, not only for big cities, such as Beijing and Shanghai, but more importantly for those less developed (developing) areas.

Secondly, training in companies needs to be valued more highly. Certain talents for different purposes and needs can be further developed through training in

companies, so that graduates acquire skills more suitable for the labour market. Thirdly, collaboration among companies, policy makers and universities needs to be encouraged when creating curricula throughout the higher education sector, so that it is more in line with the practical needs of labour market.

Finally, overseas students and returnees deserve more attention from China’s labour market, as a relatively high proportion of them are more likely to be highly

qualified and more suitable, working to internationalised standards that resonate with the requirements set by the world market. The government needs to encourage

and attract more overseas students to return to China, to help alleviate the talent shortage affecting the country.