China s Employment Crisis Spurs Universities to Chase Old Debts

Photo: A job fair in China (Getty Images)

[People News] According to the latest major statistical data on human resources and social security released by the Ministry of Human Resources and Social Security of China, the expenditure of the unemployment insurance fund in May this year reached 17.22 billion yuan, marking a year-on-year increase of 13.96% and setting a new record for May since 2022. The cumulative expenditure from January to May totaled 88.08 billion yuan, also a historical high for the same period since data has been available since 2013, surpassing the peak of 87.92 billion yuan recorded during the pandemic in 2020.

The WeChat public account 'Data GO' analyzed that due to the relaxation of epidemic prevention measures at the end of 2022, the expenditure in May this year represents the highest level for that month since the end of the pandemic. Meanwhile, the income from the unemployment insurance fund was 88.7 billion yuan, resulting in a cumulative net income of 620 million yuan, thus ending the previous eight months of negative growth. By the end of May, the number of participants in the unemployment insurance program stood at 248.85 million, reflecting a year-on-year increase of 1.62%. However, there was a cumulative decrease of 330,000 participants this year, which may indicate that the increase in retirees has outpaced the number of new jobs and those contributing to insurance.

On the surface, these figures suggest economic balance, but a deeper analysis reveals significant structural biases within China's labor market and signals of an economic downturn. While the official urban survey unemployment rate remains around 5%, described as 'generally stable', the sharp rise in unemployment insurance expenditures, the high volatility of youth unemployment rates, and the reality of a large number of underestimated flexible employment and migrant worker groups paint a stark picture of the employment winter that officials are eager to downplay.

Official Data and Hidden Truths

China's official employment statistics mainly depend on the urban survey unemployment rate provided by the National Bureau of Statistics. In the first quarter of 2026, the national urban survey unemployment rate averaged 5.3%, remaining stable compared to the same period last year, while it increased to 5.4% in March. Data from the Ministry of Human Resources and Social Security suggests that the employment situation is 'generally stable.'

However, the sharp rise in unemployment insurance expenditures has exposed the facade of the official narrative of 'stability.' The peak expenditure of 17.22 billion yuan in May indicates that more individuals have entered unemployment and successfully claimed benefits. Historical comparisons reveal that the peak expenditure of 87.92 billion yuan from January to May 2020 occurred during the early stages of the pandemic when the country was largely under a dynamic zero-COVID lockdown, forcing all industries to cease operations and leading to an unexpected halt in society. In contrast, in the current non-pandemic normal, the social context has seen a new high in unemployment insurance expenditures while functioning normally, indicating that the job market has not only failed to experience a compensatory rebound in the years following the pandemic but has instead regressed to a low point, revealing new imbalances that highlight the overall fragility of economic development.

Particularly concerning is the youth unemployment demographic. In March 2026, the urban youth unemployment rate for those aged 16-24, excluding students, rose to 16.9%, ending a previous six-month decline; the rate for the 25-29 age group was 7.7%. Although the youth unemployment rate decreased to around 15.6% in May, it remains above historical averages and more than three times higher than the overall unemployment rate.

Official data appears to deliberately overlook significant blind spots. The urban survey unemployment rate primarily includes urban registered or permanent residents, while approximately 280 to 300 million migrant workers and 300 million individuals in flexible employment are often marginalized. After losing their jobs, these individuals frequently return to their hometowns, switch careers, or fall into a state of 'invisible unemployment,' which is not adequately captured in statistics. Independent analyses by some scholars estimate that the actual number of unemployed youth in China could reach 45 million or even higher, significantly surpassing the official figures.

The credibility and transparency of official data have also come under intense scrutiny. Following a spike in the youth unemployment rate to 21.3% in 2023, statistical criteria were adjusted to exclude students, resulting in an optimization of the reported figures. The employment rate statistics for graduates from major universities and the GDP statistics reported by the Communist Party of China are based on a similar underlying logic: objectives are prioritized, and data is adjusted afterwards. The critical issue is not whether these statistical reports accurately reflect the real employment market, but rather whether they demonstrate the political awareness of those implementing them and their understanding of political achievements.

On June 4, official statistics disclosed that China's flexible employment population has reached 300 million. Following this, on June 17, the Global Times published a commentary asserting that 'China's unemployment rate has reached 40%, which is alarming,' and emphasized that 'flexible employment' does not equate to 'intermittent unemployment.' In response, some netizens argued that 'flexible employment' is the greatest invention of 21st century China, where individuals depend on securing orders to embrace the new wave of the gig economy. They have redefined social injustice through this term, condensing all instability, insecurity, and despair into personal failures and life choices, packaging it as the opportunities of an era provided by a powerful nation in a prosperous age. This situation is not primarily about policy adjustments to address issues; rather, it involves creating rhetoric that obstructs the public acknowledgment of these problems. This victory, which caters to the system's demands, starkly reflects the most profound collapse of people's livelihoods.

The unemployment insurance fund serves as a crucial safety valve to mitigate employment shocks. The peak in expenditures from January to May 2026 is indicative of the reality of increasing layoffs, workers being dismissed, or being unable to renew their insurance. Reports indicate that in 2025, 42 million people nationwide are expected to lose their insurance, and there is also a trend of insufficient new contributions from employers. The heightened utilization of the unemployment insurance fund has resulted in an imbalance between income and expenditure. At the local government level, certain regions, such as Shenzhen, are already facing tight fiscal income and expenditure, with instances of reclaiming previously issued unemployment benefits, underscoring the financial pressure at the grassroots level.

In June 2026, 12.7 million university graduates across the country entered the job market, resulting in a bottleneck effect on youth employment rates. The graduation and unemployment of university students highlight the challenges within the job market, reflecting the overall economic downturn. Prolonged economic deflation has caused financial crises for local governments, leading them to vocally urge citizens to tighten their belts and live frugally. The higher education system is facing obstacles at the output end with the employment rates of graduates, while at the input end, it is grappling with severe financial constraints. Under the limited supply system of government funding, universities nationwide are demonstrating their creativity, devising various unusual solutions to tackle the issue of inadequate educational funding, with a range of bizarre measures being introduced.

According to a report by Teacher Li on platform X, a netizen recently posted on Xiaohongshu claiming that Nanjing University of Traditional Chinese Medicine demanded that students who graduated many years ago repay tuition and accommodation fees. The netizen mentioned that they unexpectedly received a notice this year to pay back accommodation fees from six years ago and questioned, 'Aren't tuition and miscellaneous fees automatically deducted every year?' The university requested repayment of accommodation fees from eight years ago, but the individual could no longer locate their previous bank payment receipts.

In the comments section, other netizens added that they were also asked to repay a 20 yuan entrance medical examination fee from several years ago and expressed frustration that the school once went a month without turning on the lights to 'save electricity.' Additionally, a whistleblower who submitted information to Teacher Li reported that a certain medical university in the Yangtze River Delta suddenly informed students who had graduated a long time ago to repay accommodation and tuition fees from their time at school, with some students having graduated six or seven years ago.

Whistleblowers said that during their years at university, they never received any notice of outstanding fees. Nor were they reminded of any unpaid balance when they graduated. Everyone had assumed that all required fees had been paid in full as a one-time payment. Now, years later, the university has suddenly begun demanding payment, even requiring former students to locate payment records from many years ago.

Many online commenters questioned the situation: if the fees had truly gone unpaid, why were students allowed to graduate, receive their diplomas, and leave campus without any problems? Why reopen old accounts only now? Is this really a case of students owing money, or does it point to serious flaws in the university's financial management? Some netizens sarcastically remarked that perhaps the university was so short of money that it had resorted to "archaeological debt collection" against its graduates.

Put politely, this is "archaeological debt collection." Put less politely, it is the university "settling old scores." Universities in mainland China are indeed not part of the compulsory education system, and students are required to pay their own tuition, accommodation, and meal expenses in accordance with regulations. Under normal circumstances, however, once students purchase the services provided by a university, the transaction should be completed during their period of enrollment. Once students graduate and leave campus, it should signify that all transactions have been settled and all payments finalized. For a university to pursue fee collection from graduates many years after they have left raises obvious concerns about procedural fairness and compliance. The underlying issue is likely far more than simple financial mismanagement. Rather, amid a sluggish economic environment, universities are facing funding shortages, with government appropriations and tuition revenue no longer sufficient to cover operating costs. At the same time, auditing authorities have intensified scrutiny over the use of public funds. Fearing accountability, university administrators have abruptly imposed stricter fiscal discipline, pursuing student debts that might previously have been considered too insignificant to pursue or quietly overlooked, in an effort to recover what is regarded as "lost state assets" and standardize financial management. At its core, this reflects broader fiscal pressures that have triggered more rigorous internal audits and enforcement, resulting in large-scale efforts to "close the barn door after the horse has bolted" by collecting debts from graduates years after they left school. Although such systematic reopening of old accounts may improve financial compliance, it has also damaged the reputation of higher education institutions. The controversy and public backlash it has generated are enough to create a profound and lasting crisis of trust. Sacrificing institutional credibility over relatively small sums of money is a case of penny-wise, pound-foolish. Such a farce, brought about by the rigid implementation of orders and directives from above, is, in the author's view, something that could only occur under the Chinese Communist Party's bureaucratic system.

(First published by People News) △