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Today is the second lecture of the “Employment Change” series. We will talk about two structural problems that may be a bit heavy but need to be solved urgently: First, why do population decline and employment involution exist at the same time? Second, how does wealth distribution affect current consumption and investment? And then affect the expansion of employment?
Let’s talk about the first question first.
According to statistics from the Ministry of Education and the Ministry of Human Resources and Social Security, the number of fresh graduates in 2025 is expected to reach 12.22 million, nearly 500,000 higher than last year’s 11.79 million fresh graduates. Moreover, the admission rate of ordinary universities in the country is over 75%. According to the current population structure, there will be tens of millions of fresh graduates flowing into society every year until at least 2036.
But at the same time, the new jobs that can be vacated in society are obviously not up to this level. Some institutions have calculated that before 2030, the number of retirees each year will be around 7 million; and after 2030, affected by the population structure, the number of retirees each year will drop sharply to 5 million.
Simply put, the employment gap will become larger and larger.
Moreover, this does not take into account the situation of delayed retirement. With the advancement of the delayed retirement policy, the newly vacated “pits” may become more scarce. So at present, the phenomenon of more people and fewer pits may last at least until the 2040s. In other words, in the next 15 to 20 years, the employment of the whole society will be in a state of “more people and involution”.
At this time, an embarrassing thing happened: on the one hand, we have always said that we are now an aging and low-birth society, and our total population has been declining; on the other hand, as I just said, for a long time in the future, our supply of cheap and high-quality labor will increase, and employment will become more and more “volume”.
This is a structural embarrassment. And our policies have also exacerbated this structural employment problem to a certain extent: first, the system of registering household registration and providing basic public services by permanent residence is promoted; second, the household registration restrictions on participating in insurance at the place of employment are cancelled; third, a basic public education service supply mechanism coordinated with population changes is established.
These three points sound quite convoluted, but they are actually saying the same thing – the country is vigorously promoting “secondary urbanization”, that is, promoting the transfer of population from small and medium-sized cities to large cities, and in order to attract everyone, it will solve a series of obstacles that hinder population transfer, such as household registration, social security, and education.
Following this line of thought, we can continue to deduce that this policy is of course right for the country, and the purpose is to promote the scale effect of the economy of large cities and metropolitan areas. But for working people in big cities, more and more people do mean that academic qualifications are more devalued, the workplace is more involuted, and the competition is more intense.
On the other hand, as the population further transfers to large cities, small and medium-sized cities will inevitably be continuously siphoned:
First, the industries, population, and funds of small and medium-sized cities all run to large cities, which may cause the cycle of “investment-consumption-industry-employment” in small cities to become worse and worse; on the other hand, the finances of small cities are increasingly in deficit, and the cycle of “production-taxation-subsidy-reinvestment” may also become worse and worse.
Under these two cycles, the cost-effectiveness of young people staying in small and medium-sized cities is getting lower and lower, and they can only move further to large cities and the surrounding areas of urban agglomerations. This seems to be another unstoppable cycle. So I personally think that large cities will continue to “roll” and become more and more “rolling”.
At present, the ideal solution is to create new jobs to the greatest extent. As mentioned earlier, there are 12 million graduates every year, but only 7 million retire, and the employment gap is 5 million.
And creating new jobs needs to start from three aspects:
The first is that new industries create new employment needs, such as artificial intelligence, low-altitude economy, etc. But frankly speaking, this is mainly for science and engineering talents, and the overall scale of employment is limited.
The second is to “pull up” the old employment reservoir. We can see that since last year, industries such as games, the Internet, and education and training have actually become loose, because these industries used to be important reservoirs of highly educated talents, and now they need to be fully utilized.
The third is that a considerable number of white-collar talents in the past have become blue-collar. In the future, for many undergraduates who graduated from non-key colleges, engaging in high-skilled blue-collar jobs may be a more realistic choice.
But in any case, the solution to this structural problem will be a long enough process.
Let’s talk about the second topic about structure. How does wealth distribution affect current consumption and investment? And then affect the expansion of employment?
Let’s look at a set of data: The “2023 National Aging Development Bulletin” released by the Ministry of Civil Affairs shows that in 2023, China’s elderly population aged 60 and above will be 266.97 million, with a deposit accumulation of 78.4 trillion yuan, accounting for 52.2% of the total deposits of all residents, and per capita deposit reserves will reach 264,000 yuan; in addition, a research report from CICC shows that China’s wealthy population has a total of 4.6 million, accounting for 0.33% of the total population, and has a wealth of 290 trillion yuan. In other words, China’s wealth is largely in the hands of the two groups of the elderly and the wealthy.
The savings rate of the elderly in China is as high as 60%, which is twice the average savings rate of residents, and there is a high degree of precautionary savings sentiment. In other words, they love to save money. At the same time, the compound growth rate of private fixed investment, which is mainly composed of wealthy people, is less than 2% between 2018 and 2023, which is significantly lower than the compound growth rate of 12% between 2008 and 2018. In other words, the rich don’t like to invest.
Next is the key point – China’s wealth is largely in the hands of the elderly and the wealthy, but now the elderly don’t like to consume and the rich don’t like to invest, which is actually one of the important reasons for the poor economic cycle. The sluggish consumption and investment, the lack of sufficient new growth, in other words, the lack of new wealth that can make more ordinary people new jobs, also leads to a shortage of jobs. You see, this is actually a problem.
In response to similar problems, foreign countries have established a series of wealth redistribution systems. For example, for the elderly, the United States imposes taxes on pensions, Japan and South Korea impose inheritance taxes; and for the wealthy, the United States and Europe will impose capital taxes, asset taxes, departure taxes, etc. How our country will solve the problem, we can only wait and see.
Well, that’s it for today. In the next lecture, I will talk to you about two new employment trends I have observed recently, and the two focus points of the central government in boosting employment and education.
