Study: employability of Chinese graduates

More and more German companies in China need well-trained new entrants to meet their growing demand for qualified employees. At the time of the study, research indicated that too many academics were being trained in China while there was at the same time a considerable shortage of skilled workers. School and university graduates often did not meet the expectations of German companies.

Together with East China Normal University (ECNU), a university of education based in Shanghai, transformis has founded a joint research centre intended to contribute to the further development of the education system in China. As a first step, a broad survey was carried out on the expectations of Western companies of school and university graduates in China. Its results are presented here.

The study opens with a Chinese proverb: “When the wind of change blows, some build walls and others build windmills.” Through globalisation and constant technological progress, change has become the norm and China its symbol. Decades of rapid economic growth have triggered lasting institutional change, which confronts the country with a wide range of challenges.

According to the study’s analysis, the days when China’s competitive advantage lay in a poorly paid, hard-working workforce are passing. More technology-intensive products and production processes are raising the demands on staff qualifications. At the same time, demographic change, which the study also attributes to the long-standing one-child policy, is reducing the supply of labour and driving up wages.

Added to this is a fundamental change in the economic model. Instead of exports, production and investment, the economy is to be based more on domestic demand, innovation and services. Under the label “Made in China 2025”, the aim was to move from being the workbench of the world to a knowledge economy.

For this transformation, China needs well-trained skilled workers, whom foreign and domestic companies alike often searched for in vain on the Chinese labour market. Alongside rising wage costs, finding and retaining qualified staff was described for years as the greatest challenge for companies in the Chinese market. The shortage of qualified young talent became an obstacle for the economy and for international investors.

At the same time, the number of university graduates rose steadily. The central government had strongly pushed the expansion of the higher education sector, simplified admission requirements and invested heavily in the qualitative development of schools and universities. According to the study, a large proportion of graduates were nevertheless inadequately trained and did not meet the requirements of the modern economy.

There was evidently a discrepancy, a so-called “mismatch”, between the requirements of the economy and the curricula of Chinese universities. The education system did not promote the skills needed for the desired knowledge economy, nor the training of the skilled workers currently needed.

The study examines the reasons for the discrepancy between the requirements of the economy and the competencies learned by Chinese school and university graduates. It identifies structural and curricular development needs for the Chinese education system and compares the strengths and weaknesses of academic education with those of the vocational education system.

With advancing globalisation, the rise of multinational companies has become an important feature of economic development. In the decades of reform and opening up, multinational companies have had a considerable impact on China’s education and talent structure. As economic entities, they differ from the Chinese social system and its way of working and have an influence through internationality, scientific research and diversity.

Companies in China are actively looking for qualified graduates to meet their growing demand for skilled workers. At the same time, the quality of education is improving with economic development. The spread of higher education has secured the quality and number of skilled workers in Chinese society.

However, the surplus caused by the expansion of the universities led to increasing competition on the talent market. Despite this surplus, many positions remained unfilled because no graduates could be found who met the requirements and expectations.

The Blue Book on the employment report of university graduates 2009 to 2012, published by Mycos, described the structural imbalance in the employment of university graduates in China as serious. Later studies also showed that, despite many people being trained, there was a considerable shortage of skilled workers. School and university graduates were often unable to meet companies’ basic expectations of skilled workers. The imbalance results from the lack and the mismatch of graduates’ employability.

The study compares the skill requirements of multinational companies with the skills of Chinese university graduates in order to identify the gap. Building on this, and combined with a comparative analysis of the advantages and disadvantages of academic and vocational education, it works out the shortcomings of the Chinese education structure and the requirements for curriculum development.

It identifies the strengths and weaknesses of Chinese graduates in the workplace and how they deal with different situations, and derives proposals for the education and curriculum system. For the existing strengths, the reasons and sources should be understood and developed further. The weaknesses should be addressed in the corresponding curriculum system.

By reforming the education and curriculum system and the content and style of teaching, a diversified, multi-level education system with better adaptability can emerge. It can improve the quality of education and graduates’ employability, align the education system with economic transformation and the modernisation of industrial structures, and bridge the gap between employers’ expectations and graduates’ competencies.

The study was carried out as part of the “Smart Education China” initiative. Its subject is the expectations of German companies of Chinese school and university graduates and the degree to which these expectations are met.

The analysis of the expectations of Western, and in particular German, companies of Chinese school and university graduates and their fulfilment was supported and carried out by transformis and East China Normal University. The German Chinese Business Association supported its implementation.

From 7 September to 2 October 2015, 3,500 German companies operating in China were invited to take part in an online survey on the professional qualifications of Chinese new entrants to the workforce. 218 data sets could be clearly assigned to German companies in China and included in the analysis.

With a confidence level of 95 per cent and a margin of error of 7 per cent, a minimum sample of 189 responses was required to achieve a representative result for the 5,200 German companies in China at the time. According to the study, in terms of distribution by region, company size and industry, the data set meets all the requirements to be considered a representative and statistically significant analysis of German companies in China.

The online questionnaire contained 36 mainly closed questions, some of which respondents could supplement with their own statements. The data sets were also evaluated by company focus and region.

Since the 1990s, the skills that skilled workers need in the 21st century have attracted the attention of international researchers and educational organisations. In 2002, the United States was the first to propose a framework, the “Framework for 21st Century Skills”. According to this, people from different industries must learn and work together in different groups and in a diverse environment.

The framework was proposed for basic education, but also integrates the skills that adults need for work and life. While 21st-century competencies set the direction for reform in basic education, employability interprets and defines what adults need for life and society.

Researchers were already looking at employability at the beginning of the 20th century. With the third industrial revolution and economic globalisation, the concept became an important topic in management science.

Hillage’s definition is generally accepted. He used the image of the amoeba and regards employability as a dynamically changing ability that adapts to changing work situations. It means a person’s ability to find and keep a job and, where necessary, to acquire a new one.

Brown objected that this theory ignores the influence of the educational environment. He included graduates in the concept and linked their employability with higher education, and human resource management with tertiary education. According to this, the background of one’s studies, choice of subjects and even place of study can become hiring preferences for employers. Brown defined the employability of university graduates as the relative probability of gaining and keeping a job.

Cai takes the same view. According to this, a graduate’s employability comprises the person’s concrete abilities, and the reputation of the university and academic background are important external factors for their career situation.

Zheng Xiaoming was one of the first in China to draw attention to the employability of graduates. For him, it refers to the abilities that graduates acquire during their studies through learning and practice. These help them to shape their lives in society and to develop their ideals and self-worth.

Since there is no uniform definition, the structural dimensions of employability also differ. The US Department of Labor summarised them in five aspects: resources, social, information, technical skills and systems. From these, 21 sub-indicators for the respective professional competence were derived.

The British Department for Education and Employment named four criteria: one’s own IQ level, core competitiveness, personal characteristics and knowledge of business management. The Conference Board of Canada set out three competence indicators: basic knowledge, personal management and teamwork. The Australian Council for Educational Research created a model with seven core competencies for the employability of university graduates.

In China, research into the employability of graduates began relatively late and was mostly based on Western theories. On the basis of exploratory and confirmatory factor analyses, Ma Yongxia proposed six dimensions for graduates in the natural sciences and engineering: knowledge skills, self-management ability, competencies, leadership, career planning and social adaptability.

In summary, the definition of employability mainly refers to the ability and opportunity to gain employment, to hold one’s own in the long term and to develop oneself further. Countries set different priorities. In general, five dimensions are used: basic knowledge, specialist knowledge, social skills, adaptability and the ability to develop oneself.

Building on this, and with a view to the German companies in China that were surveyed, the study defines: the employability of university graduates is a combination of hard and soft skills formed during studies and practice. It enables graduates to adapt quickly in the workplace, meet employers’ requirements and improve their well-being in working life. Hard skills relate to knowledge and methodology. Soft skills include social competencies, personal abilities, experience and additional qualifications.

This results in four dimensions of employability in multinational companies. Functional and methodological skills are acquired through learning and practice and combine basic abilities with specialist knowledge. With regard to social skills, social capital theory emphasises the ability to cooperate in social relationships. This includes, for example, a sense of responsibility in teamwork and communication skills.

Personal abilities concern the individual’s flexibility, adaptability and self-development. In multinational companies in particular, the ability to adapt to different cultures is important. Experience and additional qualifications stand for the opportunity to hold one’s own and develop further. Different experiences meet the requirements of different companies. Graduates with foreign language skills and international experience may attract more attention from multinational companies.

Overall, the majority of the German companies surveyed are satisfied with the new entrants they have hired. 77 per cent are partly to very satisfied. 23 per cent stated that they were partly dissatisfied to very dissatisfied with the Chinese graduates they had hired. There were no significant differences in overall satisfaction between the company divisions. However, the analysis of competence development shows clear discrepancies between the competencies required and the degree to which graduates’ competencies have been developed.

Recruiting professionally qualified young people is a major challenge for the companies surveyed. A third were unable to fill all the positions advertised for graduates in the two years before the survey. Hiring suitable young people in technical areas and in research and development is particularly difficult.

The companies cite as the main reasons applicants’ inadequate professional and methodological competencies and too little practical experience and knowledge. Other reasons surveyed are inadequate intercultural experience such as stays abroad and language skills, inadequate personal competencies, inadequate social competencies, and other reasons.

Despite the oversupply of university graduates, the companies surveyed do not necessarily prefer a higher formal educational qualification. For commercial administration and the technical organisational areas, a slight majority prefers a bachelor’s degree to a master’s. Without distinguishing between organisational areas, the master’s degree is the preferred qualification.

46 per cent are primarily looking for master’s graduates, 41 per cent want to fill advertised positions with bachelor’s graduates, and only 8 per cent prefer young people with a vocational school qualification. As expected, doctoral candidates are not the primary target group outside research and development. Nevertheless, 6 per cent name a doctorate as the preferred qualification.

When it comes to the preferred formal qualification, companies often have to make compromises in recruitment. Competition for the few talented people drives up salaries and makes recruitment and employee retention more difficult.

The high staff turnover on the Chinese labour market makes people development more difficult. According to the study, “job-hopping”, even across industry boundaries, had become a “national sport”, especially among young employees. They are aware of the scarcity of qualified young talent and use it for career opportunities and salary jumps by changing employer. The companies surveyed cited job-hopping as the most common reason for terminating employment relationships with young Chinese employees.

According to the participants, 25 per cent of the employment relationships that had to be terminated within the first two years after hiring new entrants ended with the young employees resigning in order to take up another position.

Where poor performance was given as the reason, it was mainly a lack of professional and methodological knowledge, at 23 per cent. Less frequently cited were a lack of social competencies at 14 per cent, a lack of confidence in practical work at 13 per cent and personal competencies at 12 per cent. Intercultural problems were cited least often, at 7 per cent.

In the analysis, the companies’ expectations of the competence development of Chinese new entrants were set in relation to the respective degree of fulfilment. The study examined which competencies are important and needed by the companies and to what extent school and university graduates bring them to their jobs. The greatest development needs for the curricula of Chinese educational institutions are revealed by the difference between the importance of a competence and the degree to which it is fulfilled.

A total of 37 competencies from four clusters were included: professional and methodological competencies, social competencies, personal competencies, and experience and additional qualifications.

The companies’ requirements differ by function and position and between organisational areas. The higher the educational qualification, the higher the requirements for the competencies developed. However, the difference between expectations and the performance of young employees is greater the lower the formal educational qualification, even though expectations of those with higher formal education are the highest.

The individual assessment shows which competencies the companies need most urgently and to what extent young employees bring them. Within each cluster, the competencies are ranked by importance. In each case, the importance and fulfilment are given in per cent and the difference in percentage points, as reported by the study.

Among the professional and methodological competencies, problem-solving competence comes first (importance 91, fulfilment 53, difference 38). This is followed by learning competence (88, 68, 20), the ability to adapt to new and changed situations (86, 58, 28), and analytical and decision-making skills (85, 51, 35).

Next come subject-specific skills (81, 64, 17), broad knowledge of the discipline (77, 62, 15), eloquence and presentation skills (73, 56, 17), interdisciplinary knowledge (72, 53, 19) and research competence (63, 55, 8). On average across the cluster, importance is 80 per cent, fulfilment 58 per cent and the difference 22 percentage points.

Among social competencies, a sense of responsibility has the highest importance (importance 92, fulfilment 58, difference 34). This is followed by teamwork skills (91, 63, 29), commitment (90, 71, 19) and communication skills (89, 59, 30).

The courage to point out mistakes in organisational work processes (82, 50, 32) and the courage to admit one’s own mistakes (82, 50, 33) show large differences. The same applies to the ability to handle conflict (80, 50, 30).

Also assessed were the ability to work in an international environment (78, 57, 21), the ability to take criticism (77, 50, 27), understanding of the culture and customs of other countries (73, 55, 18), appreciation of diversity (72, 59, 13) and leadership competence (64, 49, 16). On average across social competencies, importance is 81 per cent, fulfilment 56 per cent and the difference 25 percentage points.

Among personal competencies, a sense of quality leads (88, 56, 32), followed by working independently (87, 59, 28), self-management (85, 61, 24), resilience (84, 68, 16), flexibility (82, 65, 17) and success orientation (81, 66, 16).

These are followed by initiative and business acumen (78, 54, 24), decisiveness (78, 49, 28), assertiveness (76, 54, 22) and creativity (74, 54, 20). On average across personal competencies, importance is 81 per cent, fulfilment 59 per cent and the difference 23 percentage points.

In the cluster of experience and additional qualifications, foreign language skills come first (81, 60, 21). Experience with office applications (76, 69, 7) and general IT skills (73, 69, 4) are brought almost to the expected degree.

Practical experience from internships or part-time jobs (70, 58, 12), specialist knowledge to a certain extent (66, 58, 7) and experience abroad from semesters or stays abroad (62, 55, 7) complete the cluster. On average, importance here is 71 per cent, fulfilment 61 per cent and the difference 10 percentage points.

Among the competencies with the greatest difference between importance and fulfilment, it is striking that professional competencies and experience and additional qualifications are missed less than social and personal competencies.

The study identifies as graduates’ strengths general IT skills, experience with office applications, specialist knowledge to a certain extent, research competence and practical experience. Added to these are appreciation of diversity, broad knowledge of the discipline, success orientation, leadership competence, resilience and flexibility.

As weaknesses, it names problem-solving competence, analytical and decision-making skills, a sense of responsibility, the courage to admit one’s own mistakes and the courage to point out mistakes in organisational work processes. Also among the weaknesses are a sense of quality, the ability to handle conflict, communication skills, teamwork skills and decisiveness.

The comparison of the competence clusters also shows that, across all organisational areas, the differences are greatest for social and personal competencies. Social competencies reach an importance of 81 per cent with a fulfilment of 56 per cent; the difference is 25 percentage points. For personal competencies, 81 per cent importance compares with 59 per cent fulfilment; the difference is 23 percentage points.

Professional and methodological competencies reach 80 per cent importance and 58 per cent fulfilment, a difference of 22 percentage points. Experience and additional qualifications have the lowest importance at 71 per cent and the highest fulfilment at 61 per cent; the difference is 10 percentage points. Across all clusters, the average is 78 per cent importance, 58 per cent fulfilment and a difference of 20 percentage points.

The results show that expectations of the competence development of new entrants rise with the level of formal educational qualification. Although expectations of graduates of vocational schools are accordingly the lowest, this group shows the greatest difference from the competencies they bring.

According to the study, vocational education had a poor reputation in China. Despite a clear oversupply of academics trained without practical relevance and a simultaneous shortage of qualified skilled workers, pupils and parents preferred university studies to vocational training.

The study attributes this to the state of the vocational education system at the time and to deeply rooted educational ideals in Chinese culture. According to these, vocational training has the lowest status of all types of education and is seen only as a last resort if the general educational path remains closed. Manual work was already regarded as inferior by Confucius. In China, mental work is traditionally placed clearly above manual work.

In society, vocational education was therefore also seen as a catch basin for those who had failed examinations and as a second-class educational path. With economic growth, quality of life has gained priority, and academic education and titles are seen as the key to it.

The one-child policy and the shortcomings in the social security systems intensified the already strong focus on education in Chinese families. Preparation for the Gaokao university entrance examination begins as early as kindergarten age.

In the eyes of the population, a university degree, unlike vocational training, promises a high-quality education and thus a higher salary, prestige and social influence. The study therefore describes it as Chinese parents’ greatest wish that their child obtains an academic degree, ideally at an elite university.

These cultural influences massively favoured the expansion of higher education. However, the economy and labour markets did not develop at the same pace as the expansion of the higher education sector. The socio-economic conditions were not yet in place. The result was a labour market still strongly oriented towards production, into which many academics, some of them trained for the wrong things, pushed despite the strengthening of the service sector.

The labour market continued to need workers and skilled workers. The Chinese leadership had recognised this undesirable development and, at the time of the study, was countering it with a “28-point plan for accelerating the development of modern vocational education”. As part of this reform, a large number of universities were to be converted from the academic track into vocational bachelor’s universities.

The study considers these to be the right steps. Reform of the vocational education system is crucial for the sustainable development of the economy and equally for the desired transformation into a modern knowledge economy.

The results also show that a development from exam-oriented education to holistic quality education must take place. The traditionally strong focus of the Chinese education system on examinations and recitation had also been criticised in China itself for years.

In the study’s judgement, exam-oriented education hinders the path to the knowledge economy, because constant rote learning undermines pupils’ creativity and initiative. Graduates lack key social, personal and methodological competencies that would enable them to adapt independently and continuously to a changing world.

Teaching needs a stronger orientation towards action and process that takes account of the model of complete action. This makes better use of quality learning time, and social and personal competencies can be trained without neglecting the subject content.

Constant change has long been the norm in China. The availability of information is increasing all the time, while the half-life of knowledge is falling. Companies and their employees are required to constantly update what they have learned and develop their skills further.

Merely imparting knowledge and simply testing this knowledge in examinations does not contribute to the sustainable development of the desired knowledge economy. What needs to be promoted are skills for acquiring and evaluating knowledge, so that future skilled workers can think in cross-industry contexts.

Diverse, changing staff structures and market requirements call for transferable competencies. They enable flexible, lifelong learning by the company as a whole and by each individual employee, young or experienced.

According to the study’s conclusion, the Chinese education system, general school and university education as well as vocational education, must change and break away from the examination culture in order to create room for holistic competence development. Otherwise, “Made in China 2025” could become a stigma rather than a seal of quality.

The results show that Chinese university graduates generally receive more recognition for academic knowledge and professional skills. In terms of soft skills and overall quality, measured against companies’ requirements, there is still a significant deficit.

In the study’s view, universities should take the main responsibility for narrowing the gap between graduates’ employability and companies’ needs. Universities are the most important places for promoting students’ employability. At the time of the study, they generally paid too little attention to the topic.

In most Western countries, careers guidance has developed into an established profession. The careers guidance centres set up at universities are staffed by highly qualified and professionally trained personnel. According to the study, careers guidance at universities in China was usually a neglected administrative unit that lacked well-trained staff with specialist knowledge and skills.

According to the study, most universities in China had a very vague or superficial understanding of employability. Knight and Yorke, who have had a major influence on British employability research, presented the USEM model of employability in 2004, which the study describes as the best-known and most frequently cited.

According to this model, employability comprises four elements. The first is understanding of specialist knowledge (Understanding). The second is the professional and general skills needed at work (Skills). The third is self-efficacy beliefs (Efficacy Beliefs), including personal qualities, self-confidence and motivation to learn. The fourth is metacognition (Meta-cognition), which reflects strategic thinking and action.

University careers guidance often confused application skills with employability. It offered only short-term guidance such as job information, psychological counselling, and tips on dress etiquette and job interviews. Developing graduates’ comprehensive skills and providing long-term, professional and structured support fell short.

A Chinese proverb sums up the task: teach people to fish instead of simply giving them fish. How this can be achieved is a question that universities should answer carefully.