A record number of educated young Chinese are flocking to government jobs for security as the world’s second largest economy faces growing headwinds that have diminished prospects for private sector jobs.

As many as 3.7 million applicants nationwide, including graduates from the country’s top universities, sat for the annual civil service exam last month. But only one in about 100 is expected to secure a place among the 38,100 entry-level government roles, starting next year.

Many were willing to take those odds as private job prospects dim amid an economic slump and worsening business sentiment. Unemployment among 16- to 24-year-old urbanites in China has stayed above 17% since July, compared to around 10% in the U.S.

Government jobs were once considered “iron rice bowls” for their stability and fixed hours. But as the Chinese economy opened up, the country’s educated youth pursued higher pay and more job opportunities in the private sector, vying to join home-grown technology giants such as Alibaba, Tencent and Huawei.

Now these “Iron rice bowls” are making a come back again, as a prolonged economic slump and Beijing’s regulatory crackdown on certain parts of the economy, such as real estate, technology and tutoring firms, have led to large-scale layoffs in the private sector. The top 500 private firms in China slashed their workforce by 314,600 last year, according to an industry and commerce association body.

Amid the mismatch between available roles and expectations, jobseekers are lowering their ambitions, and searching for government jobs.

Take 22-year-old Coral Yang. She spent four months job hunting before securing a role at a local marketing agency, only to have the offer rescinded weeks later after the company scrapped the position as part of cost cuts.

“There aren’t many openings out there. It’s crushing to lose an offer after months of searching,” Yang said, “but it just shows how unstable the private sector has become.” Yang, who graduated from a top university in Shanghai majoring in data analytics, is now preparing to take the civil service exam next year.

She is not alone. A growing proportion of students listed public sector jobs, including government agencies and state-backed firms, as their top career choice last year, rising to about 63% in 2024 from 42% in 2020, according to a survey conducted by recruitment platform Zhilian Zhaopin.

Within public sector jobs, students face better employment odds at state-owned firms with more headcounts — compared with government agencies — making them a safer option given the low passing rates for government exams, said Wei Shan, a senior research fellow at the East Asian Institute of the National University of Singapore.

The number of graduates seeking jobs at private enterprises is declining, dropping to 12.5% last year from 25.1% in 2020, the survey showed.

Rising uncertainty in the jobs market, layoffs and slowing wage growth in the private sector have pushed many youngsters to seek the “security, predictable benefits and social prestige of public service,” said Mingjiang Li, associate professor at S. Rajaratnam School of International Studies in Singapore.

China’s education ministry has sought to bolster employment at privately owned enterprises, offering tax rebates, social insurance reliefs and subsidies to encourage hiring young graduates. But the incentives have been low. The Shanghai municipal government, for instance, offers just 1,500 yuan in one-time subsidy per new hire.

Applications for public sector jobs surged, but openings are hardly keeping pace as local governments are struggling to expand headcounts, making civil service roles harder to come by.

Fiscal strain from the property slump has left many local governments “cash-constrained and reluctant to add staff,” said Jianwei Xu, senior economist at Natixis, noting that “government hiring, after a period of expansion, has now flattened,” making competition fiercer.

The new openings at government agencies jumped 66% in 2020 from a year earlier amid rising demand for public workers to enforce pandemic-induced lockdown and related efforts. But for 2026, the central government trimmed the headcount by 4% to 38,119.

Thus competition has become increasingly brutal: one in about 100 candidates will get hired next year, compared with one in 70 in 2023. The application-to-acceptance ratio for certain posts in rural area where jobs are already scarce was a staggering one in 6,470 applicants.

“The competition ratio in some provinces now rivals the world’s most selective universities … quietly becoming one of China’s most competitive national sporting events,” said Han Shen Lin, a professor at New York University Shanghai.

A record number of college and vocational school graduates — some 12.7 million — are entering the job market next year, set to make the race even fiercer.

As part of the push to absorb more employment, Beijing raised the eligibility age cap by three years to 38 for those with postgraduate degrees and 43 for those with PhD degrees, further increasing the candidate pool.

But still, “a significant share of the openings is being reserved for new graduates,” said Shan, estimating that about 70% of new hires this year were graduates, up from less than 40% in 2019.

The surging demand for public service jobs is also the result of an increasingly disillusioned young population losing faith in private enterprises and attaching greater importance to work-life balance, experts say.

“More people are finding appeal in what they call ‘lying flat’ within the government system,” said Shan, referring to the internet catchphrase where people drop out of the rat race and doing the bare minimum to get by. “Of course, whether it’s really like what people imagine is another question.”

Many who successfully land government jobs find the rigid bureaucracy stifling, career advancement can be slow and gets more political the higher one climbs, said Neil Thomas, a fellow at Asia Society Policy Institute’s Center for China Analysis.

“This is hardly unique to China, but increasingly pronounced,” he added.

Meanwhile, fewer students are betting on postgraduate studies. Candidates for the national postgraduate entrance exam that took place in October fell to 3.4 million, according to the education ministry, from a peak of 4.74 million in 2023, reflecting waning confidence in advanced degrees improving job prospects.

“The return on a graduate degree appears to be diminishing … the imbalance has led to a relative devaluation of the degree itself,” said Xu, adding that many students no longer see an extra 2-3 years of study as a guaranteed path to better employment.

The Zhilian Zhaopin survey told a similar story. Vocational college graduates enjoyed stronger job prospects, with employment rates rising to 56.6% last year. Postgraduates, meanwhile, saw their chances deteriorate, with fewer than 45% landing offers, down from nearly 57% in 2023.

Economists warn that an increasing share of top university graduates clustering in the public sector rather than pursuing entrepreneurial or high-risk private-sector paths could weigh on longer-term economic growth.

“Over time, this trend could reshape China’s talent landscape by strengthening the state bureaucracy’s human-capital base while reducing innovation dynamism in the private economy,” RSIS’ Li noted.