Op-Ed Contributors

Graduate to tertiary sector

By Zhang Xiaoming (China Daily)
Updated: 2010-03-08 10:37
Large Medium Small

Graduate to tertiary sector

Structural reform and preferential policies can create more jobs for college graduates in the tertiary sector, researcher Zhang Xiaoming tells China Daily's Wang Yiqing.

College graduates are finding it increasingly difficult to land a job because of the country's imbalanced industrial structure, that is, higher supply and lower demand. In other words, colleges are churning out more graduates than the market can absorb.

Data show that tertiary industries absorb more workers than primary and secondary sectors. The rapid development of the information industry may have raised the technological level of other sectors and guided China's fast economic growth. But this has reduced the first and secondary industries' capacity to absorb workers, too. During the 10th Five Year Plan (2001-2005), the secondary industries, which account for an increasing share of GDP, employed fewer workers than before.

Related readings:
Graduate to tertiary sector Male grads given edge in job recruitment
Graduate to tertiary sector Employment pressure to peak in June
Graduate to tertiary sector Should the Chinese graduate donate $8 million to Yale?
Graduate to tertiary sector Students apply for grad schools in record number

Studies show an increase of 1 percentage point of GDP in the tertiary sector can create 482,000 jobs, much more than in the primary and secondary industries. Moreover, the tertiary industries, especially the new service sector represented by the creative cultural industry, employ more educated and skilled workers, meaning they offer more opportunities to graduates.

But this theory does not apply fully to China, because the GDP contribution of its service sector is lower than the global average. According to the second economic census, the tertiary industries contributed 41.8 percent of China's GDP in 2008. The figure for advanced countries was more than 70 percent. Even in countries with per capita GDP similar to that of China, tertiary industries contribute more than 50 percent of GDP.

China's tertiary industries employ 47.7 percent of the total workforce, compared to more than 60 percent in the developed world. Besides, the development of China's knowledge-based service sector has been sluggish, ensuring that the majority of workers remain employed in the traditional service sector.

The sluggish development of the tertiary sectors can be attributed to recent macroeconomic policies. China's economic boom has been of little help to the tertiary industries, because most of the investments have been targeted at the secondary sector. Ironically, in places with the fastest economic growth, such as the Pearl River Delta region, its proportion has reduced sharply. It's the OEMs (original equipment manufacturers) that have been generating GDP growth there. Such low value-added, export-oriented manufacturing industries can hardly help the service sector, particularly the creative cultural sector.

Global recession has posed a severe challenge to China's mode of economic growth, forcing the government to adjust its development plan. This will not only help the tertiary sector to develop faster, but also unleash the pent-up momentum of cultural consumption, which eventually will create more jobs for graduates.

The majority of the companies in the tertiary sector, especially those closely related to hi-tech, are small- or medium-sized enterprises with poor risk-taking capacity. That's why they find it difficult to attract investment, making it hard for them to provide graduates with competitive benefit packages and attract talents.

Structural transformation and policy adjustments are crucial for the development of the tertiary industries in order to increase their contribution to GDP and boost domestic demand. Combined with improved social security measures, policies favorable to innovative undertakings of graduates will go a long way in solving the unemployment problem.

Graduate to tertiary sector