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Author: Jia Yongmin

Academic Advisor, Institute of Balance

Special Researcher, Interdisciplinary Center, Zhejiang University

The economic situation has been changing rapidly in recent years, and people of all ages have been affected to a certain extent. Among them, the difficulties faced by young people are particularly noteworthy.

Some time ago, an investment bank employee jumped off a building, which caused widespread discussion. This employee had a high degree, attended a top 985 university, and had always been paid a high salary. In fact, he had already rushed to the top of the pyramid. He could be said to be a "successful role model" for young people. Such an ending is regrettable.

When young people lose the motivation to strive

Many of the parties involved in other similar incidents recently were also highly educated young people in their thirties and forties. They were well educated and once had well-paid jobs. However, after their personal balance sheets were unbalanced due to salary cuts, unemployment and investment failures, they became the most frustrated group, and even collapsed under the tremendous pressure.

The reason why the tragedy of these young people who graduated from prestigious universities and originally had high salaries can win people's sympathy is that this phenomenon makes people sigh at the shattered expectations of young people "changing their destiny through studying" and "low-level people achieving class transition."

In the past, these outstanding people relied on their own efforts to go to prestigious schools, work for famous companies, earn high salaries, and settle in big cities, which shows that it is still possible to succeed without relying on birth or connections. Therefore, there is hope in life.

But even such an outstanding person can fall into difficulties, let alone other young people?People have observed that many young people nowadays seem to have lost the motivation to strive and innovate. They either work hard to pass the civil service exam to get a stable job, or lie down and even rely on their parents for support.

Of course, this is related to the changing times. In the years of rapid economic development, as long as young people are willing to work hard and seize opportunities, they can change their class even if they cannot become extremely rich. Now, even if you have a relatively stable job, it is even more difficult to achieve class transition.

However, from another perspective, economic downturns may also breed new opportunities and force innovation, so it is crucial to be nicer to young people and rebuild their confidence.

In recent years, society may not be particularly friendly to young people. Young people are unwilling to get married and have children (especially as the birth rate has dropped by half), which may be a silent resistance from them. How can we be more "friendly" to young people? This article attempts to analyze it from a detail of the social security system. However, before discussing it, in order to focus on the problem, it may be necessary to define "young people" first.

In China, there is no clear concept of different "generations" like in Japan. In many cases, people tend to just use the terms "young people" and "old people". Many people actually refer to anyone born after the 1980s as "young people".

But strictly speaking, people born in the 1980s, 1990s and the 21st century belong to different generations. Mr. Wang Mingyuan analyzed in an article that although people generally feel that life has become difficult in recent years, the degree of difficulty varies for different age groups. The retired generation is the least affected. They have a guaranteed income and receive pensions, and they can still travel and dance happily.

Most of the 1964-1974 generation have accumulated certain savings and have basically fully enjoyed the dividends of the times. Even if the industry is in a recession, they can wait for retirement with peace of mind.

Although the start for those born in the 2000s was brutal, they are still young and can adjust themselves calmly and wait for the next opportunity.

The people who are most affected are those born in the 1980s and 1990s. They have little experience and are less able to withstand the impact. They are either facing marriage and childbirth, or have elderly parents and young children to take care of, and they have the heaviest financial burden. They are at a critical stage in their careers. If a downward cycle lasts for more than ten years, their golden period of career may be over.

This analysis is insightful, but there are two points worth discussing.

First, there is a big difference between those born in the 1980s and those born in the 1990s. Those born in 1980 will be 44 years old in 2024, and those born in 1989 will be 35 years old, and 35 years old has a well-known special meaning in China. Therefore, although those born in the 1980s can still be said to be young, they have become the backbone of the family and belong to the most typical "stress generation". In contrast, some people born in the 1990s (especially those born in the 1995s) are not the real backbone of the family, because many of their parents are still in their prime. Therefore, if those born in the 1990s lose their jobs, they still have support if they are humble enough.

Second, the post-00s generation is not so “easy”. In fact, it may be more difficult for them, because the post-80s and post-90s generation still have the opportunity to seize some of the dividends of the times (or at least the tail of the dividends), while the post-00s generation is more likely to fall into the dilemma of the “Ice Age Generation” similar to Japan.

Japan's "Ice Age Generation" has seen serious class differentiation. Only a few formal workers who have successfully "landed" after fierce competition can enter the elite class, while more people find it difficult to find stable jobs and therefore cannot maintain the class status of their parents.

Some researchers believe that one reason for this is that Japanese companies have long pursued the "centralized recruitment of fresh graduates", that is, the employment tradition of companies recruiting fresh graduates uniformly every year and conducting centralized vocational training. As a result, the identity of "fresh graduate" has become an indispensable stepping stone for job hunting. Once young people lose this identity, it is difficult for them to find a formal job.

This "dilemma of previous graduates" also exists in China.

If you cannot find a job as a fresh graduate, it will be much more difficult to find a job that matches your major in the future. There are two reasons for this. On the one hand, because he cannot find a job immediately after graduation, the employer may doubt his ability (and he has no relevant work experience); on the other hand, after "hanging around" in society for a while, the employer may think that he is not as easy to manage and shape as fresh graduates. The craze for civil service examinations and postgraduate entrance examinations in China is also related to this.

Therefore, whether a system is "youth-friendly" may be best reflected in its "attitude" towards the first and last groups of young people:The first group is the “top young people” who are unable to find jobs as fresh graduates, and the second group is the “tail young people” who are unemployed after the age of 35.

Why is social security perhaps an obstacle to promoting employment among young people?

As discussed above, the existence of “discrimination against previous graduates” and “discrimination against those aged 35” has made it particularly difficult for the two groups of young people to find (re)employment. This section will discuss that the existing social security system may not be particularly friendly to the (re)employment of these two groups of young people.

Not long ago, the National Bureau of Statistics announced the national average annual salary of employees in urban units in 2023. The national average annual salary of employees in non-private units was 120,698 yuan, an increase of 6,669 yuan over the previous year, a nominal increase of 5.8%; the average annual salary of employees in urban private units was 68,340 yuan, an increase of 3,103 yuan over the previous year, a nominal increase of 4.8%.

As of July 16, 2024, except for Jilin, Shanghai, Hubei, Tibet and Xinjiang, the remaining 26 provinces have announced the average annual salary of urban employees in 2023. Some cities have also announced relevant data. For example, in 2023, the average salary of non-private units in Shenzhen's urban areas was 171,800 yuan, and the average salary of private units in urban areas was 94,200 yuan.

The social average wage is the pre-tax wage. When converted into monthly salary, we can get the pre-tax average monthly salary of non-private units in Shenzhen's urban areas is 14,300 yuan, and the pre-tax average monthly salary of private units is 7,800 yuan.

The average social wage is a very important indicator in China, and one of its key roles is:The state stipulates that each province should determine the upper and lower limits of the individual social security contribution base based on the average wage of urban employees in the province, which is a weighted calculation of the average wage of employees in non-private units in urban areas and the average wage of employees in private units in urban areas.

There are two points to note about this indicator.

First of all, the average wage is only the average wage of employed people, that is, the unemployed are not included in the statistics.Therefore, it is possible that a large number of low-paid employees will lose their jobs, while high-paid employees who have kept their jobs will also have their salaries cut, but in the end the average salary calculated based on those who are still employed will actually increase.Therefore, an increase in average wages does not necessarily mean a good thing in itself.

Secondly, determining the social security base based on the average wage may further suppress employment. Take a certain municipality as an example. From July 1, 2023, the minimum wage standard of the city will be adjusted to 2,690 yuan, and the upper and lower limits of the social security contribution base will be set at 7,310 yuan/month and 36,549 yuan/month from March 2024. Assuming that a young person is willing to accept the minimum wage in order to find a job, how much social security fee does the employer need to bear?

According to the city's policy, in this case, the employer needs to bear all social insurance costs, including the part paid by the employee. The employer and the individual must pay for three insurances: pension, medical care and unemployment. The employer also needs to pay for work-related injury insurance (the rate is 0.16% to 1.52%, based on the lowest 0.16%). The total social insurance costs that the employer needs to bear are 7,310 yuan multiplied by (16% + 9% + 0.5% + 0.16%) + (8% + 2% + 0.5%) = 2,643.3 yuan. This means that the social insurance costs that the employer needs to bear are basically equivalent to the employee's salary.

With social security costs accounting for such a high proportion, it is difficult to encourage employers to hire more employees.

More generally speaking, social security fees are in a sense equivalent to a payroll tax. The contribution base is determined according to the average wage, and those whose actual wages are below the average and their employers are required to pay at least the minimum base. This is equivalent to levying more taxes on people with lower incomes, which may be unfair or at least not very friendly, especially for those young people in trouble whose actual income is below the minimum contribution base.

In the current economic situation, the greatest help for young people may be to help them find (re)employment. Investing limited financial resources in stabilizing employment may be more effective in stabilizing China's economy and helping young people.

Therefore, perhaps, promoting employment by providing financial subsidies and making social security more friendly to young people is an idea worth exploring.

This article is an original article specially commissioned by the Phoenix News Commentary Department and only represents the author's views.

Editor: Liu Jun