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Don’t be surprised, there’s a new ‘apocalypse’ hit China

Jakarta, CNBC Indonesia – The problem of labor is now engulfing most of the world. From Malaysia, Australia, the United States, hinge Japan, all of them are struggling with the ‘doomsday’ workforce.

Workers are hard to find. The Covid-19 pandemic was one of the causes, which led to worker restrictions and decreased interest in working in several sectors, especially health, including manufacturing.

But things are a little different in China. The country’s young population is actually facing an ‘apocalypse’ of work.


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In the report CNN International, the youth unemployment rate has reached its highest level this year. In March it was at 15.3% and in April it was at 18.3%.

This figure has continued to rise for several months. In July the figure reached 19.9%.

“The rate fell slightly to 18.7% in August, but still remains among the highest,” said China’s National Bureau of Statistics, quoted Tuesday (20/9/2022).

According to data CNN urban youth population of 107 million. This percentage alone means that there are 20 million people aged 16 to 24 who are out of work.

Unfortunately, there is no data that measures rural youth.

“This is certainly the worst youth employment crisis in China in more than four decades,” said Jamestown Foundation senior fellow in Washington DC, Willy Lam.

“Mass unemployment is a major challenge for the Communist Party. Providing economic growth and job stability is the key to the Party’s legitimacy.”

Why?

The high unemployment rate itself occurred when several Chinese technology companies began to downsize their organizations. E-commerce giant Alibaba recently reduced its workforce by more than 13,000 in the first six months of this year.

“This is the largest reduction in employee numbers since Alibaba registered in New York in 2014,” according to the data same page.

Tencent, the social media and gaming giant, shed nearly 5,500 employees in the three months to June. This is the largest labor contraction in more than a decade.

“The importance of this latest technology industry cut cannot be underestimated,” said Craig Singleton, senior China analyst at the Foundation for Defense of Democracies.

Singleton said the jobs crisis could undermine President Xi Jinping’s ambitions. Xi is known to want to turn the country into an innovation leader and a global technology superpower in the next two to three decades.

“This latest cut poses a double threat to Beijing going forward. Not only have thousands of people suddenly lost their jobs, but now these Chinese tech giants will have fewer qualified employees to help them innovate and scale to face their Western competitors, ” he added.

“There’s a saying in business circles that ‘if you don’t grow, you’re dying,’ and that simple truth threatens to undermine China’s broader technological ambitions.”

Many Thrifty & Chinese Economy

Meanwhile, the difficulty of working is now making many young Chinese citizens frugal. Quotes Reutersmany young people are now applying frugal living.

This has happened since the Covid-19 pandemic hit the world. However, the decline in salaries also affects including the lack of work.

“I don’t do manicures anymore, I don’t do my hair anymore. I’ve bought all the cosmetics made in China (because they’re cheap),” says Doris Fu.

“I used to like watching two films every month too, but I haven’t been in the cinema since the pandemic,” added Fu, who is also a huge fan of the film.

According to data compiled by online recruitment firm Zhilian Zhaopin, the median salary in China’s 38 major cities fell 1% in the first three months of the year. As a result, some young people prefer to save rather than splurge.

Indeed retail sales in China rose just 2.7% year-on-year in July, recovering to 5.4% in August. But that figure is still well below the level of most of the 7% plus during 2019, before the pandemic.

Looking at the latest quarterly survey of China’s central bank, the People’s Bank of China (PBOC), nearly 60% of people now tend to save more, rather than consume or invest more. That figure was 45% three years ago.

Chinese households as a whole added 10.8 trillion yuan in new bank savings in the first eight months of this year. That’s up from 6.4 trillion yuan in the same period last year.

This is a problem for Chinese economic policymakers. Because Beijing has long relied on increased consumption to drive growth.

[Gambas:Video CNBC]

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