'Rotten-tail kids': China's rising youth unemployment breeds new working class

By Ryan Woo, Ethan Wang

BEIJING (Reuters) -Rising unemployment in China is pushing millions of college graduates into a tough bargain, with some forced to accept low-paying work or even subsist on their parents' pensions, a plight that has created a new working class of "rotten-tail kids".

The phrase has become a social media buzzword this year, drawing parallels to the catchword "rotten-tail buildings" for the tens of millions of unfinished homes that have plagued China's economy since 2021. 

A record number of college graduates this year are hunting for jobs in a labour market depressed by COVID-19-induced disruptions as well as regulatory crack-downs on the country's finance, tech and education sectors. 

The jobless rate for the roughly 100 million Chinese youth aged 16-24 crept above 20% for the first time in April last year. When it hit an all-time high of 21.3% in June 2023, officials abruptly suspended the data series to reassess how numbers were compiled. 

One year on, youth unemployment remains a headache, with the reconfigured jobless rate spiking to a 2024 high of 17.1% in July, as 11.79 million college students graduated this summer in an economy still weighed down by its real estate crisis. 

President Xi Jinping has repeatedly stressed that finding jobs for young people remains a top priority. The government has called for more channels for the youth to access potential employers, such as job fairs, and has rolled out supportive business policies to help boost hiring. 

"For many Chinese college graduates, better job prospects, upward social mobility, a sunnier life outlook - all things once promised by a college degree - have increasingly become elusive," said Yun Zhou, assistant professor of sociology, University of Michigan. 

Some jobless young people have returned to their hometown to be "full-time children", relying on their parents' retirement pensions and savings. 

Even those with post-graduate degrees haven't been spared.

After spending years climbing China's ultra-competitive academic ladder, "rotten-tail kids" are discovering that their qualifications are failing to secure them jobs in a bleak economy.

Their options are limited. Either they cut their expectations for top-paying jobs or find any job to make ends meet. Some have also turned to crime. 

Zephyr Cao obtained a master's degree from the prestigious China Foreign Affairs University in Beijing last year. 

Now 27, and back in his home province of Hebei, Cao has stopped seeking full-time work after lower-than-expected wages made him question the value of his education. 

"If I worked for three or four years after my undergraduate studies, my salary would probably be similar to what I get now with a master's degree," Cao said. 

Cao said he was considering pursuing a PhD in hopes his prospects would improve in a few years. 

Amada Chen, a recent graduate from Hubei University of Chinese Medicine, quit her sales job at a state-owned enterprise last week after just one month. 

She blamed her decision on the toxic work culture and her boss's unrealistic expectations. For the first 15 days of her probation, she was also getting just 60 yuan ($8.40) a day despite having to work 12 hours daily. 

"I cried every day for a week," she said.

Chen had wanted to become a quality inspector or a researcher, jobs she thought would match her skills as a traditional Chinese medicine major.

But over 130 job application letters later, she was offered mostly sales or e-commerce related positions.

Chen said she was reconsidering her career path altogether and might turn to modelling. 

UNCERTAIN OUTLOOK

Joblessness among college graduates is not without precedent.

In 1999, China dramatically expanded the enrolment capacity of universities in a bid to produce a better educated workforce to drive its fast-growing economy. 

But the supply of graduates had kept exceeding jobs, with authorities expressing concern in 2007 over job availability, an issue that receded but never fully faded as more youth armed with degrees entered the market. 

The outlook is uncertain even when a student's major aligns with market needs. 

Shou Chen finished her third year at Beijing University of Posts and Telecommunications this year majoring in artificial intelligence. 

However, Chen has yet to secure an internship after more than a dozen applications, and remains pessimistic about the job market. 

"It may be worse," she said. "After all, there will be more and more people (in this field)."  

Supply of tertiary students will exceed demand from 2024 through 2037, after which the effects of falling fertility rates will kick in and sharply narrow the gap, according to a study published in June by China Higher Education Research, a journal under the education ministry. 

New college graduates will likely peak at around 18 million in 2034, it said. 

($1 = 7.1436 Chinese yuan renminbi)

(Reporting by Ryan Woo and Ethan Wang; Additional reporting by Qiaoyi Li and Laurie ChenEditing by Shri Navaratnam)