Are universities to blame for rising youth unemployment in Asia?

Few people, if any, saw Sheikh Hasina’s downfall coming. Despite her longstanding grip on control, the end came quickly for Bangladesh’s autocratic leader as the student protests that began in July snowballed into a widespread anti-government movement. Violent repression from the authorities failed to stem the unrest and Hasina was gone by the first week of August. The match that lit the fire? Reforms to job quotas that were seen as making Bangladesh’s difficult labour market even harder to navigate for most of the country’s brightest young people.

Bangladesh is far from the only country where disillusion among young people about their future prospects has fuelled discontent. In India’s elections earlier this year, incumbent prime minister Narendra Modi fared worse than expected after unemployment emerged as a major issue for voters, with graduates among the most affected.

In China, young people have been showing their frustration with a tough job market in a more subtle way than their South Asian peers: by literally taking it lying down. In 2022, the concept of tang ping (“lying flat”) began trending on social media – the message being that working relentlessly to hold on to a job that many others would gladly do if they were fired is not the only option for the country’s youth.

But why are some Asian job markets faltering when, broadly speaking, Asia’s universities are on an upward trajectory, both in terms of reputations and enrolments? More East Asian institutions are being ranked among the world’s best each year, for instance, while Indian universities’ global profiles have benefited from the advent of impact rankings. Simultaneously, the number of people in the region accessing higher education is increasing rapidly. In China, the gross higher education enrolment ratio was 8 per cent in 2000. Now, it is 60 per cent, with almost 12 million students expected to graduate from the country’s universities this year. Similarly, India’s 58,000 higher education institutions cater for a massive 43 million students – an 18 per cent increase compared with five years ago.

Part of the answer to why this enrolment boom has coincided with a rise in youth unemployment is that while there are many positives to expansion, it has diminished the rewards reaped by young graduates, many of whom have been led to believe that university is the pathway to building a better life. In India, for instance, young people were told that a degree is the best way to secure a skilled career that pays better than the agricultural jobs they would otherwise be doing, says Santosh Mehrotra, chair of the Centre for Informal Sector and Labour at Jawaharlal Nehru University. However, for many, that has proved to be the wrong move as supply of graduates has mushroomed while demand for their services has not.

“The too-rapid massification of higher education is a big cause of youth unemployment, in addition to too few non-farm jobs being created in the last decade,” says Mehrotra.

In fact, alongside Bangladesh, “India is one of the few countries where the relationship between education and employment rate is inverted,” adds Ravi Srivastava, director of the Centre for Employment Studies at Delhi’s Institute for Human Development. According to a 2024 report, co-authored by Srivastava and published by the International Labour Organization (ILO), India’s youth unemployment rate in 2022 was nine times higher for graduates than for those who could not even read or write. Overall youth unemployment peaked at 17.5 per cent in 2019, before falling to 12.4 per cent in 2022; in comparison, it was only 5.7 per cent in 2000.

In China, too, “a growing number of graduates are struggling to find a job that fits their expectations and hopes”, says Ewan Wright, assistant professor in the department of education policy and leadership at the Education University of Hong Kong. In June 2023, youth unemployment in China peaked at about 21 per cent – a statistic so calamitous that the government reacted by suspending publication of the data altogether.

“An extended period of unemployment can be devastating for young people and their families,” says Wright. “Additionally, it can create disenfranchisement – identifiable in discourses such as tang ping.”

In South Korea, a nation that prizes education above almost all else, youth unemployment rates are better. Indeed, at 8 per cent in 2021, they were well below the 12 per cent average among member countries of the Organisation for Economic Cooperation and Development (OECD). But graduate unemployment has grown over the past decade, while the figures for other demographics have remained relatively stable.

Moreover, employment rates in South Korea are also low, at 44 per cent in 2021 – nine percentage points below the OECD average. Reports suggest that when they can’t find jobs that meet their aspirations, young Koreans simply opt out of the labour market altogether.

Bangladesh, Sri Lanka and Indonesia are among other nations in the region reporting similarly concerning statistics. The issue, of course, is not just an Asian one. However, in a continent that is responsible for over half of the world’s GDP growth and 55 per cent of the global expansion in the working-age population, if youth discontent continues to intensify, as it did in Bangladesh, this could have seismic consequences for the global economy.

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The fact that graduate unemployment is rising is not to say that higher education institutions are wholly responsible. It is not universities’ fault that the relationship between education and earning levels starts to become less linear “under conditions of rapid expansion of higher education and of economic problems”, says Ulrich Teichler, former director of the International Center for Higher Education Research at Germany’s University of Kassel. After all, this rapid expansion has been led by governments and been happily embraced by citizens eager to enter the burgeoning middle classes. Still, it would perhaps be understandable if, looking at rising unemployment statistics and declining graduate premiums, the region’s youth started to turn their backs on universities.

That doesn’t appear to be happening, however. This is, in part, because the decision to go to university is not just a practical one, but an emotional one, too, according to Anita Medhekar, senior lecturer in economics at Central Queensland University and a graduate of the University of Delhi. “Even the servant class in India dream of sending their children to university and work hard to pay their fees,” she says.

Meanwhile, East Asian culture has been shaped by its “Confucius heritage…which sets a very high premium [on] higher education”, says Dian Liu, associate professor in the department of media and social sciences at the University of Stavanger in Norway. “For normal households, attending a very prestigious university remains a significant source of pride, even though job prospects may pose a concern later.”

Not only do young people want to go to university, the expansion of higher education means that, in some cases, they have no choice if they want to secure a professional job. Careers that previously didn’t require degrees now do so, says Teichler, who has been researching the links between higher education and employment since the 1970s. His research has shown an increase in the required entry qualifications for what he terms “middle jobs” in many countries. “For example, many technical, administrative or medical jobs, which did not require a higher education degree in the past, today require – formally or informally – a degree,” he says.

Jisun Jung, associate professor in the Faculty of Education at the University of Hong Kong, adds that a low graduate employment rate does not “discourage people from pursuing higher education”. Instead, it encourages them to pursue “better” education to make themselves more competitive in the labour market. In Korea, she says, this often impels parents to send their children to expensive private primary and secondary schools, as well as shelling out on additional tuition for them, to maximise their chances of getting into the most prestigious universities. Graduates, meanwhile, are more likely to go on to postgraduate study.

“The competition to enter elite universities or professional disciplines, especially in medicine, starts in the early stage of education, even from the primary school level,” she says.

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Youth and graduate unemployment is not a new challenge for policymakers, but it is one they are struggling to fix. In South Korea, for example, the OECD describes youth unemployment as a “complex issue” resulting from “various structural problems”, including prolonged low economic growth, a reluctance among graduates to lower their professional expectations and a mismatch between the skills of graduates and labour market demands.

That mismatch, though slightly different in each country, is a common theme cited by economists and politicians across the region. “It’s not that employers are not looking for workers,” says Jawaharlal Nehru’s Mehrotra. “They’re looking for workers, but they can’t find them because there aren’t enough people with the right skills who they can hire.”

In response, governments in China, India and South Korea, among others, have in recent years invested more in vocational education – often at the expense of traditional higher education. In India’s latest budget, for example, university funding was cut while more money was invested in skills, including a promise to upgrade industrial training institutes, which deliver post-secondary vocational education.

Mehrotra laments that this “diversion” of students into vocational education or training did not occur earlier: if it had, the “rapid expansion” of higher education in India, which has “overburdened” universities, “could have been avoided”. But he welcomes the government's move, believing that it will “prepare students for the workforce”.

In a speech made earlier this year, Chinese president Xi Jinping also addressed the “supply-demand imbalance” in China’s labour market, saying it is “imperative to boost vocational education and improve the country’s lifelong vocational training system”.

Progress in that direction has already been made. Both the number of vocational institutions established, and their student numbers have risen steadily in recent years, with China’s three-year vocational colleges enrolling 5.5 million people in 2023 (up 3 per cent year-on-year). By comparison, 10.4 million were enrolled on undergraduate programmes – but some of these also have a vocational focus.

However, experts believe that a number of factors are acting as blocks on faster expansion of vocational education. Chief among them are public attitudes towards these kinds of qualifications, which still have “a lower social status” in China, according to Liu: “Although study programmes in vocational training have greater relevance to the workforce and may assist students in securing employment more easily, many households remain resistant to them.” And the same can be said for families in other parts of Asia and beyond (as one UK college boss told researchers: “Universities are seen as prestigious; colleges are seen as where other people’s kids go.”).

In South Korea, says Jung, resistance to vocational education is not just snobbery. It has resulted from poor salaries, career development opportunities, work-life balance and corporate cultures in small and medium-sized manufacturing companies, she explains: “If the working conditions of these companies that accommodate vocational education graduates improve, the prospects of vocational education will also improve.”

Meanwhile, perhaps in recognition of the fact that widespread enthusiasm for vocational education is unlikely to emerge overnight, policymakers continue to support – and pressure – universities to evolve in accordance with employers’ needs.

In the same speech as that in which he praised vocational education, Xi also called for university majors to be adjusted in line with workplace demands. This followed a plan announced by China’s Ministry of Education in 2023 to “optimise” higher education majors by 2025, including establishing new programmes in areas of professional demand – such as national security studies, electronic information materials and intelligent marine equipment – and removing less relevant ones.

However, Randall Jones, former head of Japan and Korea at the OECD, believes policymakers should consider more creative – and often simpler – solutions. For example, he believes that giving students more flexibility to adjust their majors could help reduce the skills mismatch. “Many [Korean] students abandon their preferred field of study to enter a highly-ranked university,” he says, with the consequence that the areas in which they are most interested and naturally talented aren’t necessarily the ones in which they end up pursuing jobs.

This student behaviour is driven in part by the fact that the South Korean government caps the number of students allowed to enrol in Seoul’s universities – which include the country’s prestigious “SKY” triumvirate of Seoul National, Korea and Yonsei universities. In a policy paper published in 2022, Jones argues that this “weakens [Seoul-based] universities’ incentives to improve their performance to attract more students” because students who want to study at Seoul universities tend to enrol on any course they can get a place on, rather than the one likely to secure them the best job. By phasing out the caps, universities may be incentivised to improve their quality to become more competitive, as well as to adjust the courses they offer based on genuine demand.

In India, meanwhile, the Institute for Human Development’s Srivastava says the “very poor quality” of Indian higher education means that graduates are not as employable as they ought to be. Hence, improving the quality of education is key to creating a graduate workforce with the skills the labour market needs, he believes.

“You need many more high-quality educational institutions,” agrees Jawaharlal Nehru’s Mehrotra. “That’s why the government finally woke up and invited foreign universities to set up campuses in India.” That permission was granted as part of India’s ambitious new National Education Policy, published in 2020, although so far interest from overseas institutions has been limited.

Specific investment in lower-tier universities can help. In China, “the education system remains very hierarchical,” says Liu. Top universities “have quite a lot of resources and investment”, which, in turn, generates a “more qualified alumni network” that new graduates can lean on to help them take their own places in the workforce. If investment at central, provincial or local levels were directed towards less renowned universities, those institutions’ graduates might more readily develop the skills and networks required to secure employment, she believes.

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As well as the more obvious programmes to boost employability, such as work placements and industry involvement in curricular planning, there are also less obvious things universities can do.

Interdisciplinary learning is one important area recognised in India’s National Education Policy. “The needs of the 21st century require that liberal broad-based multidisciplinary education become the basis for all higher education,” the policy reads – even for programmes in “professional, technical, and vocational disciplines”, which have traditionally been seen by students as near guarantees of employment. Singapore is already well ahead in this area. At the National University of Singapore (NUS), for example, students in certain faculties are required to take 15 common curriculum courses, which leaders say will help them to be flexible when entering the job market and capable of switching professions as jobs evolve in the future.

The International Center for Higher Education Research’s Teichler believes universities also need to focus on providing long-term job search support. “Most universities have no systems at all or only marginal systems for supporting students who are not successful in their early job search or are not happy with the results of their early job search or, from the outset, did not want to get employed immediately after graduation and actually start seeking a job somewhat later,” he says.  

Then there is entrepreneurship training – often touted as the miracle solution to unemployment. After all, if the labour market is so saturated that it is unable to absorb graduates no matter what they have learned, why not teach students to generate their own jobs?

“I think true entrepreneurship is probably the only solution that the [Chinese] government has for transforming its economy,” says Yuyang Kang, a higher education researcher at China’s Xihua University. But, as academics like Kang have found, the effectiveness of university entrepreneurship programmes appears somewhat limited.

Perhaps, in some cases, that reflects a lack of institutional buy-in. Research conducted by the Education University of Hong Kong’s Wright found that, in China, the focus on entrepreneurship is often seen by universities as “a political task” after the government introduced a policy aimed at the mass promotion of entrepreneurial skills. “Students found entrepreneurship courses of limited value and institutional support inadequate,” he says. Some universities simply rebranded existing courses, rather than creating new provision, while financial support for start-ups was “minimal”. Many students engaged in these programmes decided that starting a business was “impractical due to a lack of resources and fear of failure”, Wright says, while those who forged ahead were “exposed to high levels of risk of failure”, which led to “emotional stress” and, in some cases, economic loss.

“In my view, embedding entrepreneurship and innovation into higher education can be valuable as part of a broad education for university students,” Wright says, “There is no harm in doing so. However, there is a need for a reality check in terms of the extent to which such initiatives can make a significant difference in graduate employment.”

Despite these concerns, Wright is “optimistic about China’s capacity to navigate through this stage” of relatively high graduate unemployment. “China’s increasingly educated population will likely be an important driver of economic development over the coming decades, not to mention the non-economic benefits of an educated population for society and culture,” he says.

Stavanger’s Liu is also positive about the prospects for the millions of graduates emerging from China’s universities. “One thing I have observed is that students become more and more pragmatic [in their job searches] because they acknowledge the competition at a very early stage,” she says. “Students are very creative in how to enhance their own employability at the same time.”

Nevertheless, as the case of Bangladesh aptly illustrates, the stakes are high, not only for students but also, potentially, for national leaders. And nowhere more so, commentators suggest, than India. While Narendra Modi may have clung on to power in the recent general election, some suggest that he will not be so lucky at the next election – if he even gets that far – unless he gets to grips with youth unemployment.

“What has happened to Sheikh Hasina could well happen to our leaders,” says Jawaharlal Nehru’s Mehrotra. “That’s the state of agitation of India’s youth.”