Hats off to the class of 2023

With youth unemployment at record highs across Mainland China, and companies freezing hiring—or even firing—staff, the latest crop of college graduates is entering one of the roughest job markets in recent history.

The unemployment rate for 16- and 24-year-olds in urban areas hit a record 21.3 percent in June.

CEOs, from real estate developers to tech entrepreneurs, are primarily focused on organizational efficiency and the consolidation of businesses. This is mirrored across the world.

In the US, technology companies are going through some of the most significant layoffs in recent history. Together, four of the biggest tech companies—Meta, Alphabet, Amazon, and Microsoft—cut over 50,000 jobs in January. ?

The class of 2023 has had it rough. This was the class that had its education interrupted by COVID-19, as online classes became a formative part of students’ college experience. This is the class that witnessed some of the fleeting moments of riches from meme stocks, crypto-trading, and NFTs, which came crashing down with the collapse of FTX.

Graduates are coming out of this turmoil only to enter a workforce that is descending into a recession with much fewer job offers in traditionally high-paying professional careers.

Let’s be clear: there are jobs available as the overall labor market remains tight. But college graduates are not excited about the abundance of more traditional labor-intensive, service-oriented jobs. Many are feeling disillusioned, demoralized, and depressed.

They’re concerned that by not getting off to a good start now, their careers will stall even before they’re able to begin. They’re worried this will have a long-term impact on their careers.

Yes, there’s no denying times are tough. After a hopeful start to the post-COVID era in the first quarter, Chinese businesses are realizing that recovery will take time.

The overcapacity across all industries, from real estate to manufacturing to professional services, is depressing prices and margins. Pessimism in the private sector has led to large cut-backs in spending and hiring.

Moreover, this feels like a prolonged downturn that will likely last for the next 12-18 months.

However, there is no need to despair. First, innovation and the pace of technological change have made fundamental changes to the modern job. Career paths are much more fluid and shorter than ever before.

The first job, or even the first industry, for the 2023 graduate will very unlikely define their ultimate career. Rather, continuous learning with multiple career stages will likely be the norm. New breakthroughs in Web3, sustainability, and generative AI are giving birth to new careers.

Second, corporates are much more open to candidates that pursue diverse career paths and resumes. Bosses and human resource professionals are acknowledging that the start-up entrepreneur, the “slasher” pursuing multiple ventures at the same time, the self-sustaining blogger/KOL (Key Opinion Leader), may offer a unique proposition to our ever-diversifying workplace. Companies are learning quickly that diversity leads to better and more productive teams.

Lastly, adversity builds resilience and character. COVID-19 taught companies that building resilience is a key corporate virtue. McKinsey research shows that healthy, resilient organizations were better able to withstand major disruptions and come out of downturns much stronger than competitors. For the class of 2023, there is no shortage of adversity—and hence, no better way of building resilience early in their careers.

We will look back at the last few years as extraordinary years of challenge and pain. (COVID quarantines already feel like a bad dream). For new graduates, if they can hold onto their sense of purpose, stay optimistic, and continue to learn new skills as they launch their job search or start their first jobs, they will certainly position themselves for future success.

For all we know, the Class of 2023 may be our best graduating class yet. ?

Joe Ngai is Chairman of McKinsey & Company’s Greater China practice.