The 2019 Chinese Graduate Unemployment: A Microeconomic Case Study

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Introductory microeconomics
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Table of Contents
(A)....................................................................................................................................................3
(B)....................................................................................................................................................4
(C)....................................................................................................................................................5
(D)....................................................................................................................................................6
References........................................................................................................................................7
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(A)
It is not the propitious time to enter the job market because of the unemployment situation in
china. As the recruiters who provide jobs to the new graduates pay around 4000 yuan ($580) per
month which is less than the half of the average salary of the Beijing and not also twice than the
minimum wage of the city. In fact China has produced a record of 8.3 million graduates this
summer which is also more than the entire population of Hong Kong. Before 10 years china
produced about 5.7 million graduates and now there is an increase of 2.6 million. Because of
these reasons, it is stated that it is not the right time to enter into the market and also one of the
reason can be trade war with America which have harmed the economy of the china and now it is
growing on the slowest pace in nearly 30 years. This year the number of university graduates
joining the labor force is about 2/3rd of all the labors which have increased from whatjust had
three years ago. Even the number of graduatesis more than the ability of labor market to absorb
them (Introductory to microeconomics. (2019)).
Graduates and Job opportunities
in China
years 2008 2010 2012 2014 2016 2018
Graduates (in
million) 5.7 6.2 6.7 7.3 7.9 8.3
Job (in million) 3 3.2 2.9 3.4 2.8 3.1
2008 2010 2012 2014 2016 2018
0
1
2
3
4
5
6
7
8
9
Comparison of graduates and Job
opportunities
Graduates (in million) Job (in million)
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(B)
The growing ranks of the unemployed graduates are worrying the authorities because there are
very less no. of the job opportunities in the country and the 5 state agencies have warned the
local government regarding the boosting of employment which has become more generous. The
authorities are worried because a number of graduates which are produced are not matching with
social stability.The labor demand is also not matching with the labor supply because the ability
of the labor force cannot absorb the huge no. of graduates from the universities (Introductory to
microeconomics. (2019)).
The diagram shows the increase in the supply of labor than the demand for labor force
(BC campus, 2019)
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(C)
Three inventions which can help to boost the employment and wages of university graduates. As
the situation of the unemployment in china is becoming worst and the increase in the number of
the graduates do not match with the demand of the labor in the market government needed to
introduce some of the measures in order to tackle this situation (Introductory to microeconomics,
2019).
 The government has announced the measures which targeted getting more graduates into
the work. The government have promoted and motivated the small firm to hire the
unemployed graduates and in return, they will become eligible to apply for the tax rebate.
 The government hasalso introduced the national system of household registration. Hukou,
which restricts where the people can get the subsidized public services, will be kinder to
the new graduates. This new rule instructs all the provincial capitals except the big cities
such as Beijing and Shanghai which will further make it easier for the fresh graduates to
apply for local hukou which can further boost the mobility of labor.
 Government is helping the fresh graduates by providing collateral-free loans to the
graduates who want to start their own business. The graduates who cannot get hired or
those who do not have the entrepreneurial drive are invited to visit one of the local
branches of the “one on one assistance”. Local government is also trying to help by
providing several measures to unemployed graduates. One of the cities in the Guangxi
province has announced that helping the graduates to find the jobs are their utmost
priority.
Because of this unemployment situation,the government has even stated that don’t expect too
high income instead job which is offered to you take it as a blessing (Introductory to
microeconomics. (2019)).
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(D)
During the situation of the perfect competition, the efficient labor market can allocate jobs to
graduates with different wage expectation in several ways.
 They can hire the graduates on the basis of the proper selection criteria instead of just
looking only to their professional qualification.
 The selection criteria can include various stages which can test the logical, analytical and
quantitative skills of the graduate. For example – in case of a content writing
organization they can take the test of the graduate by giving them a topic and allow them
to do the content writing on that particular topic within a limited time, and the best
content writer should be selected.
 To check the confidence level of the graduate the company can organize a group
discussion session to find the most confident graduates.
 There should be marks provided for each stage of the test and the graduate with the
highest marks or particular benchmark would be given the expected salary and others
would be given lower than that salary according to the marks they have scored
(Economic discussion, 2019).
This does not happen in reality because companies hire the graduates on the basis of the
university in which they have studied and does not consider the inbuilt skills. They keep the CV
of the graduates from the prestigious university and avoids the graduates from unpopular
universities (Introductory to microeconomics, 2019).
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References
 BC campus. (2019). Demand and supply of the labor market. [Online] BC campus.
Available at: https://opentextbc.ca/principlesofeconomics/chapter/4-1-demand-and-
supply-at-work-in-labor-markets/ [Accessed: 6 September 2019]
 Economic discussion. (2019). Demand and supply of the labor force. [Online] Economic
discussion. Available at: http://www.economicsdiscussion.net/demand/demand-and-
supply-of-labour-explained-with-diagram/1755 [Accessed: 6 September 2019]
 Introductory to microeconomics. (2019). Idle hands; skilled but jobless. [Online]
Introductory to microeconomics. Available at:
https://locusbucket.s3.amazonaws.com/locustool/media/file/D4YDFLCL60/task/
2019/09/05/AH-Tejesvani.pdf [Accessed: 6 September 2019]
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