Unemployment in China is rising to record levels, especially affecting not the unskilled as one might expect, but university graduates, some of whom are forced to take low-paying jobs or settle for jobs that do not require their skill level.

“This university bubble has finally burst,” said Yao Lu, a professor of sociology at Columbia University in New York. “The expansion of university education in the late 1990s created this huge influx of university graduates, but there is a mismatch between the supply and demand of highly skilled workers,” he added. The scourge of underemployment is also a problem that Chinese youth and politicians must address.

In an article co-authored by Lu and University professor Xian Jiaotong, professors estimate that at least another quarter of university graduates in China work part-time, which is not included in the high unemployment rate for this age group.

“More and more college graduates are taking jobs that don’t match their education to avoid unemployment,” Lou told CNBC. Underemployment occurs when people take low-skilled or low-paid jobs, and sometimes part-time jobs, because they cannot find full-time jobs that match their qualifications.

“These are jobs that were mostly occupied by people who did not graduate from university,” Lu said.

Six million Chinese aged 16 to 24 in the urban workforce are currently unemployed, a figure that has doubled from pre-pandemic times.

It is worth noting that, according to research by Stanford University, university graduates who started working during periods of economic crisis earn at least 10-15 years less than graduates during periods of prosperity.

Data from the Bureau of Statistics of China shows that 6 million of the city’s 96 million workforce aged 16 to 24 are currently unemployed, up 3 million from the pre-pandemic period, according to Goldman Sachs.

This will likely make the Chinese government’s action more urgent. “Declining job prospects may inevitably cause resentment among young people, and a seeming failure to secure their material well-being may undermine the social contract that the Communist Party has made with the people in China,” said the chief executive of China Beige Book.

As China’s aging and shrinking population will limit its economically active population, the impact of youth unemployment and underemployment could “potentially have a very negative impact on the economy,” Colombia’s Lu told CNBC.

In April, China’s State Council announced a plan to better match jobs for young job seekers. This includes support for vocational training and internships, a commitment to a one-time expansion of public enterprise hiring, and support for the entrepreneurial aspirations of college graduates and immigrant workers.