What do you do with millions of extra graduates?

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Students celebrating at the end of exams, June 2014Image source, Getty Images
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What goes up: Pupils celebrate with their teacher at the end of college entrance exams

Rising joblessness among new university graduates in China and India is creating an army of educated unemployed that some fear could destabilise these huge economies.

Both India and China have experienced a higher education revolution in the past decade, with the number of young people completing university degrees rising from a few hundred thousand a year to many millions.

Dramatic expansion of university education should have provided new graduates with opportunities unheard of in their parents' generation.

Instead, with an alarming rise in the number of unemployed and under-employed graduates, a large group of educated young people are becoming alienated, unable to become part of the growing middle class.

The numbers are staggering. In India one in three graduates up to the age of 29 is unemployed, according to a Labour Ministry report released last November. Total unemployment in the country is officially closer to 12%.

Universities and colleges turn out five million new graduates each year.

'Idling' graduates

In China this month a record 7.26 million will graduate from the country's universities - more than seven times the number 15 years ago.

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Will China's economy meet the aspirations of its young people?

Unemployment among new graduates six months after leaving university is officially around 15%. Even that conservative estimate means over a million new Chinese graduates will be jobless.

The real unemployment rate could be closer to 30% - some 2.3 million unemployed from this year's graduating cohort alone, according to Joseph Cheng, professor of political science at City University of Hong Kong.

"These are big numbers. You can easily imagine this could certainly be a very important source of unrest in China," said Prof Cheng.

Those without degrees are more willing to take blue-collar jobs, with China's non-graduate unemployment as low as 4%, says Yukon Huang, senior associate at the Carnegie Endowment for International Peace in Washington DC.

He said China's leadership has for some time been extremely worried that graduate unemployment could fuel unrest of the kind that prompted the Tiananmen crackdown on protesting students in 1989.

Because of its possible impact, the social and political implications of "idling" graduates are being studied by political scientists, economists and other social scientists.

China's education ministry has already indicated that it wants to turn 600 universities into polytechnics, providing more technical and employment-related courses, rather than academic and theoretical subjects.

Unfulfilled aspirations

"There are some who see it as fuelling violence and destructive politics," said Craig Jeffrey, professor of development geography at Oxford University, an expert on India's unemployed youth.

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Rainfall in Bangalore: India's young graduates can get stuck waiting for jobs

"In many government reports they are seen as hostile to the state. Some believe there could be huge migration of educated young people across borders.

"In the past, India was seen as the country of the bus conductor with a BA. Now it is the country of the MA manual labourer. It has got so much worse," said Prof Jeffrey. "It is a revolution of rising aspirations and the economy can't keep pace."

Many graduates used to find jobs in the state sector in both India and China.

But with a significant youth bulge in India's population and rapid expansion in university education in China, the numbers have outgrown what can be absorbed by the jobs market.

The private sector is picky. Indian students "spend a lot of time on their degrees and ultimately realise that these degrees are not going to provide a passport into the private sector jobs," says Prof Jeffrey.

Young people waiting for opportunities that never arrive have been dubbed by Prof Jeffrey as the "timepass" generation.

He describes a generation of bored young graduates, marking time and detached from the world. "Waiting has become a profession for these young people," he said.

"Their parents are on their backs wanting them to get a job. But they don't have the English language skills or knowledge and confidence to be able to compete for the small number of, for example, IT sector jobs, that are emerging in India."

'Ant tribe'

But even in China, with its searing economic growth, the "ant tribe" has been a growing phenomenon.

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Job adverts in Guangzhou: China has seven million more graduates to employ

The "ant tribe" refers to the army of under-employed or underpaid graduates unable to fulfil their ambitions, according to sociologist Lian Si, whose book The Ant Tribe was published in 2010.

It described the plight of the country's post-1980s generation of low-income graduates who live together in often squalid communities in big cities waiting to join the work force.

Many of them end up spending more than they can earn. They are now regarded by sociologists as part of the country's underclass, joining lowly social groups such as peasants, migrant workers and unemployed workers, despite being intelligent and hard working.

Since the Ant Tribe was published the outlook has deteriorated. China Youth Development Foundation in Beijing estimates there are more than 160,000 "ant tribe" members in the capital alone. Around a third graduated from China's most prestigious universities.

Yet surprisingly, rather than angry and militant, researchers have so far found these graduates in China and India to be calm and still generally optimistic believing there are still jobs out there.

"At the ground level educated India's underemployed young people are not often firebrand radicals," Jeffrey said, adding it is a surprise they are not more angry as in the case of Arab Spring youth.

Nonetheless there is disappointment and in both countries the educated unemployed have become detached from wider society.

They are adjusting their expectations rather than taking radical action, researchers note.

"Grievances are accumulating but these young people are not yet ready for confrontation with the Chinese authorities," Prof Cheng believes.

Well connected

But he warns against complacency. "A sharp economic downturn in China could trigger it," said Prof Cheng, combined with rampant corruption which makes many graduates feel they are being shut out of jobs and that merit matters little.

"The college educated in China are not the kind that go around causing a lot of trouble because they are still hoping they will eventually get a job," said Huang. Nonetheless, an increasing perception that the system isn't fulfilling their expectations is causing a lot of unhappiness.

In particular, a view is widespread among both "timepass" youth and the "ant tribe" that jobs only go to those with political connections, rather than qualifications or skills.

The economic effects are easier to predict than possible unrest.

In India, there are fears that the demographic bulge will not yield the anticipated economic advantage.

The International Monetary Fund (IMF) said India's young population has the potential to produce an additional 2% per capita GDP growth each year for the next two decades.

Instead experts now talk of a "gargantuan national crisis", a ticking time-bomb of unemployed and under-employed youth unable to contribute to the economy.

China's plan to transform from a manufacturing economy to a knowledge-driven innovation economy by 2020 could be jeopardised.

Getting more Chinese into universities was meant to help build the innovation-led knowledge economy. "Instead it is creating new vulnerabilities," said Mr Huang.

Many factory jobs are now paying more than entry-level office positions, Mr Huang said. It has led to a deterioration in China's export competitiveness as its goods become more expensive, reducing its current account surplus.

China's transition to a services-led economy "is not guaranteed," and that could have complex implications for the global economy, said Mr Huang.

As for India, if its youth bulge fails to become economically active, the country will remain a low-income economy with pockets of prosperity rather than even growth.