By EconMatters

“They share every similarity with ants. They live in colonies in cramped areas. They’re intelligent and hardworking, yet anonymous and underpaid.” ~ Lian Si, Author of “Ant Tribe”

“Ant Tribes” (??), a term coined by sociologist Lian Si, a professor who wrote a book with that title in 2009, broadly describes China’s post-80s generation of “low-income college graduates who live together in communities with poor living standards.”
These youngsters in China are well educated, many with science, engineering and finance degrees.  From China Daily:

“A survey in [Lian Si’s sequel] “Ant Tribe II” found nearly 30% of “ants” are graduates of prestigious universities – almost triple last year’s proportion. Most had degrees in popular majors, such as medicine, engineering, economics and management….In addition, 7.2% of “ants” have at least a master’s degree compared to 1.6% in 2009. An “ant’s” average monthly salary is 1,904 yuan ($286), with about 64% of them earning fewer than 2,000 yuan a month.”

reasons for young residents remaining in Bejing

There are more than 1 million “ants” live in big cities, about 46% spend more than they earn, and 80% have no savings, according to another survey in the 2010 Annual Report on the Development of Chinese Talent, released by the Social Sciences Academic Press in June.

China – 10% Jobless Rate Among College Grads

In June, Xinhua reported that the employment rate of college graduates in China was 89.6% in 2010, about 2% higher than that in 2007, according to a survey by education research company MyCOS Institute.

Separately, China Daily reported that the employment rate among college graduates in 2010 increased by 4.2% year-on-year with 72.2%, or 4.56 million of all graduates in 2010 found jobs as of July 1 last year, based on statistics released by the Ministry of Education.

That suggests around 30%, or 1.76 million, of new college grads in China can’t find a job, while the unemployment rate for college graduates is around 10%, which is much higher than the 4.1% average urban jobless rate in China.

And it’s only going to get worse.

China – 7 Million New Grads A Year

The Ministry of Human Resources and Social Securityindicated that China will have about 6.6 million college graduates in 2011, vs. 6.3 million in 2010, and acknowledge that the employment situation facing them will be tough.

What’s compounding the issue of the sheer number college graduates en masse is the fact that many graduates’ expectations for jobs do not match market demands, according to a statement from a State Council meeting on May 25.

China’s Problem – Oversupplied & Mismatched

Indeed, China is the largest developing country in the world far from being fullyindustrialized, and lacks the necessary infrastructure to properly place these highly educated young people.

The nation owes much of its GDP (and therefore new jobs) to the manufacturing, industrial, and exporting sector, which mostly have more openings for blue collar workers instead of white collar jobs.  There are simply more of them than jobs that they are qualified for, and the lack of affordable housing also has contributed to the “Ant Tribes” formation.

Furthermore, due to the imbalance of social and economic development between urban and rural areas, ‘’Ant Tribes’ are clustered around major coastal regions like Beijing, Shanghai and Guangzhou, whereas rural areas, especially in the western regions, where work environment can be difficult, have a much higher demand for college graduates.

U.S. – 20 Million More College Grads by 2025?

While China seems to have an over-supply of college grads, the United States, on the other hand, is not producing enough college-educated workers to meet economic needs and reduce income inequality, at least according to a new study –“The Undereducated American”–released by Georgetown University Center on Education in June.

percentage of educated work force in america

The study finds that currently, the number of college-education Americans is growing by just 1% a year, and the nation has been producing too few college-educated workers for more than three decades (See Chart).

If the U.S. is to make up for lost ground and respond to future economic requirements, the report says the rate of new educated workers needs to go up 2.6% a year, adding 20 million college-educated workers, includes 15 million new Bachelor’s degree holders to the economy by 2025. That will boost GDP by $500 billion adding over $100 billion in additional tax revenues. Online colleges and universities will be instrumental in increasing the number of college-educated workers.”

China – Economic Growth & Urbanization

In China, there’s a central belief of associating education with social and economic status which is ingrained in the Chinese culture dating back even before Confucius. That partly explains the current oversupply of college graduates and “Ant Tribes” as parents sacrifice almost everything just to put their kids through college in pursuit of a better future, and this is unlikely to change in the foreseeable future.

To absorb those graduates, China would have to maintain around 7-8% annual GDP growth rate, diversify its economy into high tech, financial and services oriented, and make a philosophical change to the entire education system based on quality vs. quantity.

Judging from various projections, this growth rate most likely is sustainable; nevertheless, to fundamentally diversify and revamp the economic and educational structure could be an uphill battle and would take decades.

For now, the central government has indicated it will prioritize the creation of jobs for college grads, and aims to create work through loans, subsidies, policies. Ultimately, infrastructure and housing will be built in China, and “Ant Tribes” would eventually dissipate with the expected mass urbanization to take place in the next two to three decades.

China – Beware of Frustration & Revolution

In the medium term; however, since patience is not one of the virtues of the young, Ant Tribes and soon-to-be Ant Tribes are likely to become more and more frustrated. Historically, many riots and revolutions have started when young people (particularly in packs) become frustrated. This is probably a greater risk to the country’s stability before its economy could catch up with more suitable jobs.

U.S. – College Degree, But Not College Job

unemployment rate among college graduates

In the U.S., the persistently high unemployment rate also presents new college grads with a similarly bleak job outlook as their peers in China.

In May 2011, NYT reported that both employment rates and starting salaries for new college graduates in the U.S. have fallen sharply in the last two years. In 2009, 22.4% of all college grads had no job, and only about half of the jobs landed by these new graduates even require a college degree (See Chart).

U.S. Boomer’s Great Job

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