Higher Education and Labor Market in China

1. Higher Education and Labor Market in China Ding Xiaohao

2. Background • Chinese higher education system has undergone very rapid expansion and experienced some dramatic changes in recent years. Enrolment increased very quickly. In 1998, there were about 1.08 million new students admitted to regular institutions of higher education, while in the year 2006, the new intake of students increased to more than 5.4 million. Such an expansion is unprecedented in terms of the increased number of students and the rate of growth. Nottingham

3. Recruit increase since 1990 Nottingham

4. In the past higher education was restricted to the elite, and there was no need to match the supply of college and university graduates with the demand of the society for special talents. Graduates did not need worry about jobs. They not only enjoyed special treatment as the “state’s cadres” after graduation, but could choose from a wide range of positions. However, as the higher education has transformed from an elite to a mass education form, the supply needed for the labor market also largely changed. A diploma from college and university became the most basic qualification for most posts. Nottingham

5. Such a rapid expansion in the supply of graduates over a short period of time is rather unique. The supply and demand of graduates in the job market has experienced profound change within a context when enrolments have increased dramatically • This has led to concerns about the employability of recent graduate cohorts. Nottingham

6. National Key Project on ‘ Higher Education and Labor Market’ • The project (IEE of PKU) is intended to: • Raise awareness of the reality of graduate employment in China; • Explore with relevant constituents the problems associated with the labor market entry of graduates; • In tackling the problem of graduates, improve the understanding of the advantages and disadvantages of the higher education options • Enhance the capacity to design and implement policies and programs for promoting higher education graduate employment. Nottingham

7. Surveys • The project team has managed 3 questionnaire surveys of graduates of higher education institutions nationwide in the years 2003, 2005 and 2007 Nottingham

8. Questionnaires • The questionnaire contained a wide range of questions relating to graduates’ individual and employment characteristics • socio-demographic questions: sex, age, residential origin, parental social economic status,…; • human capital characteristics: degree level, educational specialization, type of institution attended, class rank, academic performance, certification, …; • Job searching: channel, expenditure, times of interview, time of rejection…. • employment questions: starting salary, nature of employment, job satisfaction, firm-size, type of contract, sector and type of organization,…. Nottingham

9. Perspectives of empirical studies • Distribution of graduates’ whereabouts • Starting salaries • Determinants for employment in labor market • The comparative advantage of different types of graduates • Social embeddedness: social network • Institutional embeddedness Nottingham

10. 1. Distribution of graduates’ whereabouts

11. Graduates distribution in 2007 (%) Nottingham

12. By education level • The higher the education level, the better the whereabouts: (“unemployed” index reflects the proportion of the group that wanted to find a job but haven’t found one) • the college and vocational higher education graduates account for 24.3%, • bachelors’ is 23.0%, • Masters’ is 12.1%, • doctors’ is 10.1% respectively. • Especially in “employed”, “freelance and the like”, “self-employed” and “other flexible employment”, the proportion of college graduates is higher than those with bachelor degrees, while those with bachelor degrees are more likely to “pursue a higher degree” and “go abroad’. Nottingham

13. By employment region • Divided by employment location: • in provincial capitals and municipalities directly under the Central Government account for 45.2% • in prefecture-level cities account for 35.0%, • in country-level cities or countryseats account for 14.1%, • in villages and towns account for 4.4% and in rural areas account for 1.4%. Nottingham

14. By gender • The male rate of “whereabouts fixed” is higher than that of the female: male accounts for 73.0% and female accounts for 68.4%, the two differ by 4.6 percentage points. • The proportion of females that study further for master’s degree or go abroad has reached 19.3%. It is 3.9 percentage points higher than the male. Nottingham

15. By nature of employers • Private enterprises, state-owned enterprises and government agencies account for 70.4% of the job destinations that graduates eventually secure, represented as 34.2%, 23.5% and 12.7% respectively • Research units, higher education units, middle and primary education units, medical and health units and other institutions account for 1.1%, 3.8%, 1.6%, 5.3% and 1.9% respectively. Three kinds of foreign investment enterprises account for 9.5%. • Compared with 2005, the percentage of various kinds of enterprises has increased significantly to reach 72.1%. Particularly, the private sector has become the main employment unit of graduates. The proportion in 2007 has increased by 17.9 percentage points. Nottingham

16. By work type • Various kinds of professionals (like engineers, accountants, teachers, doctors, lawyers, etc) are still on top and account for 34.3%; • Various kinds of auxiliary work (like technicians, nurses, secretaries, cashiers, etc) account for 20.8%; • Various administration work (include government agencies, institutions, mass organizations’ administration works) account for 17.7%; • Various business management work (like managers, department directors, etc) account for 8.6%; • Various service work (like safeguards, food service, sale service, marketing, etc) account for 11.4%; • Various production work in industry and agriculture first-line account for 5.0% and 0.1% respectively; • Others account for 1.9%. Nottingham

17. Distributions by years (%) Nottingham

18. Increasingly diverse • Freelance • Self-employed • Miscellaneous flexible employed • Formal sector/ informal sector Nottingham

19. 2. Starting salaries

20. By educational level • Median • college graduate monthly starting salary is 1,100 yuan, • Those with bachelor degrees is 1,500 yuan, • Those with Masters and Doctorates earn about 3,000 yuan. • Arithmetic mean • college graduates’ is 1,410 yuan and compared with 1,333 yuan in 2005, it has increased 77 yuan; • the bachelor degree group is 1,788 yuan and compared with 1,549 yuan in 2005, it has increased 239 yuan; • Those with Masters is 3,469 yuan and compared with 2,674 yuan in 2005, it has increased 795 yuan; • Those with doctorates is 3,252 yuan and compared with 2,917 yuan in 2005, it has increased 335 yuan. Nottingham

21. By gender • Median • male monthly starting salary is 1,500 yuan • female is 1,300 yuan. The difference is 200 yuan. • Arithmetic mean • male is 1,871 yuan, • female is 1,696 yuan • The difference is 175 yuan. • Compared with the arithmetic mean value of 2005, male and female monthly starting salary of 2007 has increased 240 yuan and 189 yuan respectively. Nottingham

22. A positive correlation between the educational levels reached and the starting salary levels obtained • Starting salaries vary by quality of institute attended – this is perceived by public Nottingham

23. 3. Determinants for employment in labor market

24. By perception of graduates • in descending order according to its impact degree : • 1. strong working ability; 2. relevant practice and work experience; 3. higher degree level; 4. job interview skills; 5. good appearance; 6. hot specialty; 7. school reputation and status; 8. more employment information and opportunities; 9. relatives’ help; 10. good academic record; 11. teacher’s recommendation; 12. friends’ help; 13. have been student leaders; 14. good reputation of previous graduates; 15. registered permanent residence of the employment city/town; 16. party members; 17. male; 18 give sb. a gift to buy favors. Nottingham

25. 4. The comparative advantage of different types of graduate

26. Does the type of institution matter? • Ding (2004):Compare the labor market position of graduates from two types of higher education-- University vs. College (higher vocational education): • graduates from these two different levels of higher education have a “weak comparative advantage”, but not a “strong comparative advantage”, in their respective occupational domains; • the comparative advantages were mainly determined by the education level but not by the education type---; • Since the differences between the two types should not just caused by differences in level, but rather by differences in educational objectives, It is important to stress the distinguishing features of two different types of higher education in order to enhance the comparative advantages of the graduates in the labor market. Nottingham

27. 5. “Social embeddedness”

28. Which is more important: Human capital or Social network? • Ding (2004): Social network (“social embeddedness”) is always effective to find a vacancy. In China’s particular institutional and cultural environment, how great is the influence of social network on graduates job seeking in comparison to human capital? Which one is more important? • Graduates’ perception of the relative importance of human capital and social network in their job seeking: • Male graduates perceive a higher relative importance of human capital over social network than female do; • Groups with higher education level perceive a higher relative importance of human capital over social network than groups with lower education level do; • Graduates from higher ranked universities perceive a higher relative importance of human capital over social network than those from lower ranked universities do; • Groups originally from metropolises or city areas perceive a higher relative importance of human capital over social network than those from towns do. • The advantages graduate groups perceive a higher relative importance of human capital over social network than those who are disadvantaged Nottingham

29. Under the social and political pressures for meritocracy and fairness, the decline of social embeddedness should be evident at the higher, more “elite” end of the job market. • Brinton & Kariya (1998) Nottingham

30. 6. Institutional embeddedness

31. The preferences and the effects of institutional embeddedness • Li, Morgan, Ding, Hou (2007): • Institutional embeddedness and non-embeddedness are more common for university graduates’ job-search than for college graduates’ job-search; whereas social embeddedness is less prevalent at university level than at college level. Institutional embeddedness is the most likely job-search channel for university graduates; whereas social embeddedness is the least job-search channel at both university and college level. Nottingham

32. At the university level, graduates from higher-ranked universities have greater probabilities to use institutional embeddedness than their counterparts from lower-ranked universities since potential employers are more willing to foster institutional ties with top universities so that they can attract high-quality graduates. It supports the argument that, with economic transition, employers are more rational and are more concerned about future benefits before they make investments. Nottingham

33. At the college level, graduates from private colleges have greater probability to use institutional embeddedness than their counterparts from public colleges. The reason is that compared with public colleges, private colleges’ survival and development depends more heavily on the successful placement of their graduates. Therefore, private colleges have more incentive to develop institutional connections with potential employers. In any case, it supports the argument that employers have more choices when they want to have institutional cooperation with higher education institutes since the job market for higher education graduates has been a ‘buyers market’ following the expansion of higher education in China since the late 1990s. Nottingham

34. After educational attainment and reputation of university or type of college controlled, higher-quality graduates measured by class rank of academic achievements are more likely to search theirs jobs through institutional embeddedness than are lower-quality graduates. However, those graduates who have experience in holding office in student societies or in volunteer social work are likely to use institutional embeddedness as much as those graduates who have no such experience; those graduates who are Chinese Communist Party members are likely to use institutional embeddedness as much as those graduates who are not; although generally speaking those who have such social experience or who are CCP members are more likely to access institutional resources. It further indicates that attracting excellent employees or screening qualified employees are important causes which push employers to make investments in institutional ties with universities or colleges. Nottingham

35. As for the effects of institutional embeddedness, it really does work. Through institutional embeddedness, graduates have greater probabilities to get their first jobs than through social embeddedness and nonembeddedness. It is really important for higher education institutes and graduates since maintaining higher education graduates’ employment has become a major policy issue for the Ministry of Education even Chinese central government in recent years. In addition, institutional embeddedness also helps graduates to get high-ranked occupational jobs and to enter into large enterprises. Nottingham

36. Institutional embeddedness is more common in the context where employers seek higher-quality labor or colleges pay more attention to their graduates’ future employment; • Institutional embeddedness helps graduates to be hired, get high-ranked occupational jobs and to enter into large enterprises. Nottingham

37. In the near future • A growing problem of graduate unemployment. • A transition process from higher education more difficult and longer • A problem of professional downgrading (or over-education) and occupational mismatch Nottingham

38. Problems in the transfer from school to labor market

39. Institutional Obstacles • the residence quota (‘HuKou’) obstructed trans-province flows of graduates; • In some regions local protectionism is still strong and there are still some local policies in favor of local graduates; • … Nottingham

40. Weakness of relevant career advice services • A large percentage of graduates didn’t get access to career planning and development ; • Lack of sufficient employment information • more than half of graduates were not satisfied with provision of employment information; • Enterprises hold job fairs on campus • …. Nottingham

41. The Side of H.E. Supply • China universities came under intense pressure to develop in graduates the ‘key’, ‘core’, ‘transferable’ skills needed in enterprises. Inclusion of business vision and strategic foresight----entrepreneurship Nottingham

42. The quality of new graduates • It is feared that post-expansion graduates may have less human capital due to • over-crowding and funding reductions, • introduction of programs with little academic content, • students with lower initial ability • Diversified teaching objectives have been encouraged: more than just the academic skills traditionally, but to make more effort to initiate work-related learning and to enhance 'employability' . Nottingham

43. The side of demands for H.E. • High private demand for higher education • to have more opportunities to find a job as graduates • to have lower opportunity cost due to the high rates of youthful unemployment Nottingham

44. The side of labor market • More job seekers with H.E. qualifications are entering the job market and obviously have an impact on supply and demand: • Employment will be increasingly competitive • The nature of graduate work will be increasingly diverse Nottingham

45. The side of Government • Employability is currently one of the high priorities on the list of Government policies. A considerable number of strategy documents having recently been produced. Nottingham

46. Rate of employment • has being taken as an important index: • “the recruitment quota of specialties with employment rates lower than 50% during 2 years in succession should be controlled strictly”; • …. Nottingham

47. A series of priority policies • Prioritised graduates who worked in areas of hard conditions for 2 or more years could be recommended and accepted in postgraduate programs, and also should be given priority in being employed under the same conditions by government organizations and state-owned enterprises and institutions; • Encourage graduates to start their own business independently and flexibly. For self-employed graduates, they are exempt of administrative and management fees within 1 year. Local governments are urged to provide petty loans and financial guarantees for graduates; • …… Nottingham

48. The Major Future Concerns • The challenges of graduate employment faced by China calls for more complex studies; • More efforts needed on construction and of information system relevant with higher education and job market. • We need more understanding about experiences and lessons from the other countries in this area. The International comparison is very important. • since new graduates in recent years typically represent only a small fraction of the whole population with H.E., more empirical researches on changes of private rate of return needed to be updated. • The survey is very time-consuming and costly. Often, the validity and reliability of data are not satisfied. Nottingham

49. The employment opportunities for graduates are not exclusively a function of the employment system and its requirements, but of the quantitative, structural and skill linkages between higher education and the employment system. Nottingham

50. Thank you Email : xhding@gse.pku.edu.cn