China’s Corporate Layoffs Aggravate Unemployment

People attending a job fair in Beijing on Aug. 26, 2022. China's slowing economy has left millions of young people fiercely competing for an ever-slimming raft of jobs and facing an increasingly uncertain future. Jade Gao/AFP via Getty Images

Chinese companies have been laying off employees since 2023, aggravating an unemployment crisis among Chinese youth.

According to the Chinese Communist Party (CCP), the unemployment rate of urban youth aged 16 to 24 reached 20.4 percent in April.

One expert believes that while this figure could be far lower than the actual one, it is a dangerous signal.

According to the latest data from China’s National Bureau of Statistics, the urban youth unemployment rate exceeded 20 percent for the first time in April 2023, the highest point since statistics became available in January 2018.

The number of university graduates in China this year is 11.58 million, an increase of 820,000 year-on-year, essentially creating a situation of “unemployment upon graduation.”

Meanwhile, major Chinese companies have joined the wave of layoffs, making the job market even tougher.

According to the 2023 AlixPartners Disruption Index released on March 27, 17 percent of Chinese companies have already started laying off employees as the economic downturn and geopolitical crisis intensify; 43 percent of the companies surveyed plan to lay off employees or stop hiring in the coming year.

Technology Giants Start Lay Offs

Since 2023, China’s online technology giants, including ByteDance, Tencent, and Jingdong have been laying off employees. There has also been news of layoffs from Bilibili, Xiaomi, and Zhihu.

According to employee data disclosed in Alibaba’s latest financial results, the company had 235,216 employees as of March 31, compared with 239,740 as of Dec. 31, 2022. The number of employees decreased by 4,524 in the first quarter of this year.

In 2022, Alibaba’s workforce decreased by 4,375 in the first quarter, 9,241 in the second quarter, 1,797 in the third quarter, and 4,163 in the fourth quarter. Combined with the 4,524 people laid off in the first quarter of 2023, Alibaba has reduced its headcount by 24,100 over five quarters.

People commute past Chinese e-commerce giant Alibaba's headquarters in Hangzhou in China's eastern Zhejiang Province on May 26, 2022. STR/AFP via Getty Images

In addition, data show that the Chinese internet giant Tencent had 116,213 employees as of March 31, 2022; 108,436 employees as of Dec. 31, 2022; and 106,221 employees as of March 31 this year, a decrease of nearly 10,000 compared to the same period last year.

The companies’ layoffs directly hurt two major groups: laid-off employees and fresh graduates.

For example, in a recent incident of the termination of graduates from CALB Group Co., Ltd., a large group of students who got an offer of employment from CALB in last fall’s school recruitment and signed a three-party agreement, were suddenly let go on May 24, and soon received a termination notice. The reason for the termination was a change of position. The terminated students were asked to provide their bank cards and account numbers and were paid 3,000 yuan (about $421) in advance as compensation for breach of contract.

According to a CALB employees’ group chat, at the end of May, the group terminated the contracts of all 2023 graduates recruited in autumn 2022 and spring 2023. There were at least 2,000 of them, involving positions such as equipment technician, front-end research and development engineer, and office service post, in cities such as Changzhou, Hefei, Chengdu, Xiamen, and Wuhan.

Companies Can’t Afford to Hire: Private Enterprise Owner

The company can’t afford to pay for the social security benefits for its employees, Xiao Ming (a pseudonym), the owner of a private enterprise in Zhengzhou city, Henan Province, told The Epoch Times on May 30.

“Companies are afraid to recruit people now because they can’t afford it. Companies can’t afford social security and provident funds for employees. They are all in a state of maintenance, so they doesn’t dare to recruit regular employees,” Xiao said.

“Upon seeing the situation this year, many companies that had planned to go to schools to recruit became afraid to do so. Many companies that had already recruited have also canceled their contracts, and these students are being laid off before they even get to work.”

Young adults look at postings at a job fair at Shenyang Aerospace University in Shenyang, China's northeast Liaoning Province, on May 13, 2017. STR/AFP/Getty Images

Xiao believes that this year will be the beginning of a big wave of layoffs.

“For enterprises, it is necessary to consider the human resources and costs,” he said. “With fewer orders and withdrawn foreign capital, many processing industries have shifted to other countries in Southeast Asia, and the number of jobs naturally decreased.”

China on the Eve of Social Unrest: Analyst

The layoffs of large corporations are a prominent manifestation of the global economic downturn, but for Western countries, unemployment is not the same as losing a source of livelihood, Frank Tian Xie, a professor of business at University of South Carolina Aiken and Epoch Times contributor, told The Epoch Times on June 2.

“Take the United States as an example, everyone in the United States has unemployment insurance,” Xie said. “With less than 5 percent of the U.S. population working in agriculture, farmers basically do not have unemployment problems.”

“The urban non-agricultural population, as long as they have worked for a period of time, can receive unemployment insurance once they are unemployed, ranging from a few months, six months, to a year. Especially during COVID-19, there were people who claimed their unemployment insurance for six months to a year. There was not a lot of money for unemployment benefits, but there was enough to live on and not go hungry.”

He said, “The CCP does not call ‘unemployment’as ‘unemployment.’ It calls it as ‘waiting for employment,’ which is a deceptive name.

“China’s unemployment insurance does not cover the whole population, and the majority of rural workers do not have it … The government does not have enough unemployment insurance to cover people who have lost their jobs in the cities, including rural workers. Once they lose their jobs, they go back to the countryside, which does not need that much labor, so China is in serious trouble right now.”

Xie compared the situation during the Cultural Revolution in the late 1960s and early 1970s with the current situation, which he believes is even more serious.

“China also experienced an economic collapse and increased unemployment during the latter part of the Cultural Revolution, when then CCP leader Mao Zedong called on intellectual youths to go to the countryside and drove them to the countryside,” he said.

“Now [Chinese leader] Xi Jinping is also trying to get young people to go to the countryside, but he doesn’t have the charisma to do so, and the people don’t listen to him, so the CCP can’t use this tactic anymore. The problem is huge. Seventy to eighty percent of university students graduating this year will not be able to find a job.”

“The overall unemployment rate in the United States is now around 3 to 3.5 percent. Almost everyone has a job. The Chinese government admits that the unemployment rate for young people is as high as 20 percent. Although [this figure] is far below the reality, it is a red flag.

“For example, if the unemployment rate of young people in the Middle East or other South American countries exceeds 15 to 20 percent, social unrest will break out. In fact, China is also on the eve of social unrest,” Xie said.