New Graduate Unemployment in Japan, China and Canada

New employees at Toyota Motor Corp. attend a welcoming ceremony Thursday on their first day of work as President Akio Toyoda speaks at the firm's headquarters in Toyota, Aichi Prefecture.

New employees at Toyota Motor Corp. attend a welcoming ceremony Thursday on their first day of work as President Akio Toyoda speaks at the firm's headquarters in Toyota, Aichi Prefecture.

Atrio of trends from three different countries have come together for this posting. Strangely I have lived in all three countries and somewhat understand their cultural backgrounds. Japan has been through a decade of economic slowdown and 20% of its newly university graduated cannot find adequate work. More than a year ago I began to read about China’s “ant colonies”, newly university graduated who can not find work, who are underemployed or who have found work in their chosen fields but are poorly paid. Finally is my real life experience here in Toronto, Canada, of being newly graduated but unable to find work in my chosen field, or in the information technology field. There are too few employment opportunities for the number of graduates, resulting in a huge number of young people, depressed because they cannot find gainful employment. While I will not dwell on the negative aspects of unemployment, student debt and poverty, is there a positive side to widespread student unemployment for society at large?

Japan

Like most other Asian countries, in Japan education is critical to success. Students walk the standard social path of working hard through elementary and high school, taking exams and doing well in order to be accepted into the best school possible. The grand finale is the critical university entrance exam, where if one does well and gets into a top Japanese university, tuition is low and upon graduation, lifetime employment from a top company is virtually guaranteed. Those that do not pass such tests are left to find another way of making a living. Education is so important that one of the jobs of the wife is to do everything for the youngster so that s/he can fully concentrate on studying and doing exceptionally in these exams. Her role even has a name: Kyoiku mama, or Education Mother.

New recruits at Japan Airlines Corp. toss paper planes at a hangar at Tokyo's Haneda airport during the bankrupt carrier's ceremony to welcome them Thursday.

New recruits at Japan Airlines Corp. toss paper planes at a hangar at Tokyo's Haneda airport during the bankrupt carrier's ceremony to welcome them Thursday.

One’s identity is directly tied to your company. In fact your company is more important than your family. One Japanese family asked me to dinner and I asked the husband what is more important, his company or his family. In front of his wife he said his company, and his wife agreed.

The intake process for new graduates to their new company is a very ritualized and highly publicized event. All large Japanese companies participate in the intake process, which ends on May 1. If after May 1 a student does not have a job in hand, they have lost the lifetime opportunity to be chosen for the new graduate intake for companies, and mist admit defeat. The new grads all dress up in their company colours and go through a process and formality of company entry, very similar to a social marriage. These events are publicized and shown on television for the whole country to see. For those that are not chosen, viewing these proceedings is both and heart wrenching and painful.

In this context it is clear that when large companies reduce their intake of new graduates, there are many social norms that are broken. The strong social will to spend so much time and energy to study and to do well in exams is called into question. The pomp and circumstance of the company entrance ritual can seem even more out of reach for students. The social norms of a generation of hard working young people is called into question. It is these young disenfranchised Japanese that might want to change these social norms for their children.

Unfortunately for those graduates that are passed over, Japanese companies only select from students of the graduating year, so next year they will be ineligible. Students can then decide to postpone their graduation and return to university for yet another year of study. If they do this they will then be eligible for next year’s recruitment campaign and hopefully an opportunity at a position in one of Japan’s top companies. Rightly or wrongly this is how large Japanese companies have recruited for over 50 years, and before this government positions for near an eternity. The process is unlikely to change.

Staying in university for another year puts increased pressure on the student, the parents, as well as the next year’s graduating class. Competition and stress levels are increased for all students and parents. Students prolong their education not because they seek increased knowledge, but because they have no employment prospects. Is this a waste of educational resources?

The strategy of staying in school long after you could graduate not only occurs in Japan but also here in Toronto, Canada. I talk to many students who have graduated with a degree of some kind, searched unsuccessfully for months for employment, and eventually decided to return to University for yet another degree. Unfortunately there is no guarantee that after another couple years of expensive tuition and time, that their secondary degree will make them more valuable to companies. While this increased enrollment may be good business for universities in the short term, if graduates are unable to find employment what does this say about the institution as an educator?

There are many negative implications when people cannot find gainful employment. The worst is the psychological impact and the rejection from society felt by the candidate. Psychological stress is readily apparent and can affect the student in the longer term.

The reason this issue has special resonance here in Japan, however, is because young people are putting off getting married and having kids for a variety of reasons, including unemployment uncertainty, and the older generation is worried the country’s pension and social security system will collapse under the weight of its growing seniors population.

That’s why talk of this second lost generation here sometimes takes on a “what’s wrong with the kids?” tone.

In extreme cases, the term hikikomori is applied, used to describe young people, especially males, who all but cut themselves off from the rest of society, often living in a virtual world of online chat groups and social networking sites, and refusing to leave their homes.

The Japanese education system, like those found in China, Singapore and South Korea, puts great demands upon youth. A multitude of expectations, high emphasis on competition, and the rote memorization of facts and figures for the purpose of passing entrance exams into the next tier of education in what could be termed a rigid pass-or-fail ideology, induce a high level of stress. Echoing the traditional Confucian values of society, the educational system is still viewed as playing an important part in society’s overall productivity and success.[11] In this social frame, students often face significant pressure from parents and the society in general to conform to its dictates and doctrines.[12] These doctrines, while part of modern Japanese society, are increasingly being rejected by Japanese youth in varying ways such as hikikomori, freeter, NEET (Not currently engaged in Employment, Education, or Training), and parasite singles.

Hikikomori: When you Suck at Everything in Life, just Retreat to your bedroom & never come out

Hikikomori: When you Suck at Everything in Life, just Retreat to your bedroom & never come out

While the social pressure in Japan is oppressive for some, leading to hikikomori, I have seen this phenomenon here in Canada. Internet technology is a very useful tool that can be used to withdraw from society, leading to increased psychosocial issues. Hikikomori is not just a Japanese phemonenon. Regardless of Hikikomori happening in Japan or Canada, it is clear to see that unemployment can have a severely negative impact on even the most talented and well educated individual. Unemployment is damaging to the social fabric of any society, but is particularly damaging to the educated young, long thought to be the future of the country.

China

Di Qun, one of the ants in Tangjialing, China rests in his cramped room.

Di Qun, one of the ants in Tangjialing, China rests in his cramped room.

The world’s most populous country, China, has a huge problem on its hands. An unwritten government strategy has always been “gainful employment for all in return for social stability”. The smarter and more educated its people, the better the country will become.

China, like Japan, has historically put huge emphasis on education. Studying and exams start in elementary school. Doing well in exams means attending the best school in your area, allowing you access to better teachers and resources. Parents push students to do well, as a university degree is thought to be one of only a few ways of escaping the poverty of farming. Emphasis on education dates back many centuries, when the Emperer used to hold exams for new positions in government. Going to university is the ideal path for young people in China.

Over a decade ago only 0.01% of China’s population could attend a university. This low percentage was thought to be inadequate by the Chinese government. Government bodies encouraged the universities with financial incentives and loans to expand in order to take in more students. In the past the government used to pay for universities, but now universities can charge tuition for their students, and charge they did. Student tuition was used, along with government financial incentives and bank loans to fuel their expansion. And expand the universities did, increasing their intake yearly. Parents saw an opportunity for their children to attend university, even though it was expensive.

Graduates began pouring out of universities. In 2009 China had graduated over 6 million students. Unfortunately there was very little quality control used for graduating students, and many companies complained about the lack of quality they saw in new graduates. No matter, the precedent had been set, and now China graduates way more students than industry and government can absorb.

China had more than six million new university graduates in 2009, but by year’s end, only 87 percent of them had found jobs, meaning nearly 800,000 were yet to be employed.

…A survey done in early 2009 by Lian and his team, conducted among more than 500 Beijing “ants”, found that about one-third of them had no formal employment contracts, with many changing jobs twice a year.

Their average monthly salary stood at just 2,150 yuan — little more than half of the capital’s average at the time.

After expanding universities in the 1980’s, China now has more than six million graduates a year, but there are not enough well-paid jobs to go round.

The small village Tangjialing, located 20 km from the downtown area in Haidian district, Beijing, China, is home to about 20,000 low-income college graduates - a demographic one sociologist likens to ants.

The small village Tangjialing, located 20 km from the downtown area in Haidian district, Beijing, China, is home to about 20,000 low-income college graduates - a demographic one sociologist likens to ants.

New graduates that could not find adequate work in their smaller cities began moving to Beijing to become migrant workers. Without the proper work permit these graduates can be easily taken advantage of and can be paid quite poorly. With high rent in Beijing many began living in the outskirts of Beijing. The tenement housing of Tangjialing was born. The term “ant colony” was created to describe the overcrowded and decrepit living conditions of these new graduates. With an average salary of $320US/month they cannot afford housing in Beijing and must commute over an hour in order to work.

Many of these graduates have studied computer science and engineering, but because of a very tight labour market and because they do not have the residential permit for Beijing, their pay is very low. Newsweek call this phenomenon China’s new high tech underclass.

“When I was at school, I believed in the saying, ‘Knowledge can help you turn over a new leaf,’” says Guo. “But since I’ve started working, I only half-believe it.”

The competition for jobs is fierce. Nearly 70 percent of high school graduates are expected to enroll in university this year, according to state media, compared with 20 percent in the 1980s. There are more college graduates than readily available jobs – a once unthinkable situation.

“Trying to find a job that pays enough to survive is much harder than I imagined,” says Ren Yanguang, who makes $150 a month as an intern at a local software company in Beijing, where the average income is four times that. “It’s frustrating because if I don’t find a job soon, then I’ll have no choice but to leave.” source

Recently Tangjialing and the plight of China’s ant colony has been getting international news coverage. There is also the social risk that these slums of educated new graduates might be hotbeds of social change. This is viewed negatively by the Chinese government, who have begun to demolish the small town of Tangjialing. The ant colony has been forced to move to a nearby town.

Canada

Here in Canada life may not be as startling as cases of Japanese hikikomori nor as gritty as the Ant Colony of Tangjialing, but youth unemployment is nevertheless a huge social problem. The vast majority of high school students are encouraged and/or coerced into going to university and community college. This is the stied and true path a good future. In the case of university a four year degree with the student living at home will cost around $20,000CAD. Living away from home a four year degree will easily cost in excess of $80,000CAD. If a student is able to get a government student loan in order to finance this education, how will s/he pay this large sum of money back to the government? Without employment everything stops and nothing is possible. Students cannot even declare bankruptcy now.

Youth unemployment rose from 10.7 per cent in January 2008 to 16.3 per cent during the summer of 2009, the report found.

“The report shows us how the impact of the recession has been immediate and severe for vulnerable groups, such as youth,” CFC president Monica Patten said. source

The most recent Canadian data reinforces the OECD’s findings. The national unemployment rate sat at 8.2 per cent in March, Statistics Canada said recently. Among youths, the rate jumped to 15.6 per cent. source

Luckily, that problem was easy to solve. Labour force statistics are readily available in Canada:

• Canada’s youth unemployment rate is 14.1 per cent. The average for “all the countries in which information is available” is 21 per cent.
• The Canadian rate has risen by 3 percentage points since the beginning of the recession. The global average has gone up by 7 percentage points.
• The rate of youth joblessness among Canadian youth is approximately double the adult rate. In the rest of the world, the youth rate is three times the adult rate.
• In Canada, 48 per cent of young people work part-time, compared to 45 per cent before the recession. Most other countries have seen a dramatic shift from full-time to part-time work in the same age bracket (15-24). source

These statistics should be alarming for Canadians. I know they are alarming for Canadian youth, as well as all unemployed Canadians. The issue is what to do to turn the tide of unemployment, even for those with solid skills that are actively looking for work.

Wrapup

I have no solutions to provide. I can only encourage Canadian companies to try to hire people from different backgrounds and experiences than you would normally, because these people could help you improve creativity in your company and therefore create better products and services.

I find it ironic that Canada was touted to weather the 2009-2010 economic recession better than all other OECD countries yet greatly lag behind all in increased productivity. Maybe Canadian companies should stop relying on the sale of our natural resources and our reliance on selling goods to the US, and look to the rest of the world as potential customers. Invest in people with non-traditional backgrounds and you will be pleasantly surprised at their creativity, hard work and persistence. Frankly the so called “international” Canada is not very international at all.

To put it bluntly, it sucks to be young the world over. The UN’s Labor Agency reported in August that global youth unemployment hit an all-time high at the end of 2009, with 80.7 million workers, aged 15-24, unemployed worldwide, up 7.8 million from 2007. source

Widespread Youth Unemployment

Disadvantages
-wider gap between rich and poor
-overall disenchantment of the unemployed
-use of university to delay unemployment
-increased depression, psychological issues
-reduced self-worth, increased stress
-lost generation: delay marriage, having kids
-ripped apart families
Advantages
-scaling back of financial and personal expectations
-increased frugality, as from Depression era
-reset focus on life balance ->no money means no choice
-decreased retail spending, an end to opulent consumption -> less impact from advertising
-increased importance of family and friends

Addendum Nov 07 2010: China’s educated youth face a tough future

Addendum Dec 16 2010: What’s the matter with kids today? Well, no jobs, no money … , What the boomers are leaving their children: Fewer jobs. Lower pay. Higher taxes. Now the Screwed Generation is starting to push back.

Addendum April 09 2013: Fries with that BA? The declining value of a degree

“In this maturity stage, having a BA is less about obtaining access to high-paying managerial and technology jobs and more about beating out less educated workers for the barista or clerical job,” the authors write in their study (The Great Reversal in the Demand for Skill and Cognitive Tasks, published by the National Bureau of Economic Research).

The Great Reversal in the Demand for Skill and Cognitive Tasks
Higher Education: Or Should I Just Keep Chasing Pavements?

2 thoughts on “New Graduate Unemployment in Japan, China and Canada

  1. Steve Clarke

    University tuition rates are a lot higher than you’re making them out to be. I live in Kingston, ON and have seen the tuition rates at Queen’s University rise from about $4000 in 2005 to $8000 in 2010. “Coerced into education” is a good phrase. It sums up how the impoverished are forced to enter university to gain meaningful employment and how they must carry with them the debt of their education for the future to come. I haven’t heard any stories about loans getting forgiven, but I know of those who are $80,000 in debt from a prestigious education, and who are learning even more at their new job at Star Bucks (they have benefits).

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