Problem of "Over education" in China

There are numerous studies in the UK and the West looking at the problem of over education - that is, having a higher level of educational qualification than is required for current employment.

This problem is often associated with recent immigrants and University graduates. Crucially for UK Universities the supply of Chinese postgraduate and undergraduate students brings in large amounts of money.

More recently there have been less Chinese coming despite an growing middle class in China. We have discussed many of the reasons on this blog before (better Universities in China, visa costs, exchange rates, low wages in China, high cost of fees in the UK, lack of jobs in China etc.).

The relatively low wages, especially in relation to the cost of education, is a primary reason.

This post from Silk Road Blog provides an excellent real world insight.

Think of the economics behind this post.

Shanghai'd! [The Silk Road Blog]

I always learn new things on business trips, and this trip to Shanghai has been no different.

First, after a day at a tradeshow I love to break the bank and fork over the big money and have a $10 two-hour foot massage. But this time I got more than the foot massage, I got an education. The 24-year-old girl that massaged my feet was a recent college graduate. She had a degree in Computer Science and had very very good English—good enough that for the entire two hours we could talk about everything: politics, economics, Shanghai pop culture and why she was rubbing feet instead of working elsewhere. Why? She explained that she can get 3x the money every month doing massages (even with no “special” services for customers) than she could working for a computer company, doing retail sales or even selling real-estate; all of which she’s done in the two years since graduation. The glut of (sometimes unqualified) college graduates and the uncontrolled migration into Shanghai have, predictably, made a buyers market for college graduates here. The going monthly rate in Shanghai is somewhere around $250 for someone with a college degree, decent English and some specialized skills (accounting, computers, etc.)

This should be a warning for America! How long do you think that 1-2 million college grads each year are going to be satisfied rubbing feet? Even with good money my bet is not for long. Due to this glut, there is a huge opportunity for entrepreneurialism in China’s immediate future. This has been one of the biggest critiques of China “they just aren’t creative or independent thinkers.” And I agree. But as an American I also believe that necessity is the mother of invention. There just aren’t going to be millions and millions of satisfied college educated graduates every year, year on year. Is not going to happen. You’re been warned.

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