The rapid increase in tertiary-educated workers, a direct outcome of the HEEEP, has created a significant supply-demand imbalance in the Chinese labor market ([13]). While the policy was intended to fuel economic development and enhance social mobility, it inadvertently fostered widespread skill mismatches, particularly in high-growth industries like information technology, advanced manufacturing, and green energy. The nature of college curricula plays a crucial role in these outcomes, as interdisciplinary education is associated with increased earnings, suggesting that knowledge integration matters for labor market success ([10]).

Empirical studies indicate that a substantial portion of graduates—estimated at around 40% face difficulties securing employment that aligns with their academic qualifications ([3]). This mismatch is primarily attributed to a systemic focus within universities on theoretical academic degrees at the expense of practical, technical, and vocational training. This trend is not unique to China; other research has shown a declining interest among PhD students in traditional academic careers, suggesting a broader disconnect between higher education pathways and student career goals ([19]). Consequently, graduates often lack the hands-on expertise and industry-specific skills employers demand in dynamic sectors. High-tech firms consistently report severe shortages of specialized talent, even as a surplus of university graduates with generalist degrees floods the market ([14]). The labor market shows a strong preference for engineers, software developers, and advanced manufacturing specialists. Yet, many graduates hold business, humanities, and social sciences degrees, which are not directly applicable to these high-demand roles. This structural disconnect forces employers to invest heavily in on-the-job training or recruit from a limited pool of qualified candidates. At the same time, many graduates experience underemployment or prolonged periods of job searching.

A critical consequence of the graduate oversupply has been the stagnation of wages and a rise in underemployment. As shown in Table 1, tertiary-educated workers saw their real wages grow by only 1.5% annually between 2010 and 2020, significantly lagging behind the 4.2% annual growth for workers with vocational training ([26]). This trend indicates diminishing marginal returns to a university degree for a large population segment. The influx of graduates created intense competition for a limited number of white-collar jobs, giving employers greater leverage to suppress entry-level salaries.

Table 1. Wage stagnation and underemployment indicators (2010-2020).

At the same time, underemployment has become a widespread problem, a form of insecure employment with serious public health effects ([8]). As shown in Table 2, 30% of urban tertiary workers were considered underemployed in 2020, working in jobs that did not match their education level ([7]). The public sector has grown as a major employer for this group, hiring 35% of graduates, often in administrative roles with limited opportunities for advancement ([7]). This inefficient use of human capital has wide socioeconomic impacts. For graduates, financial instability and unmet career goals can cause dissatisfaction and prevent investments in housing, healthcare, or further education. For the economy, it means a big loss of potential productivity and innovation, as the advanced skills of millions of people are underused. This problem can be especially severe for women, who often face additional vulnerabilities in the labor market during economic downturns ([20]).

Table 2. Unemployment and underemployment of tertiary-educated workers (2020).

A major result of the oversupply of graduates has been stagnant wages and increased underemployment. As shown in Table 1, workers with tertiary education saw their real wages increase by only 1.5% annually between 2010 and 2020, which is significantly slower than the 4.2% annual growth for workers with vocational training ([25]). This trend suggests diminishing returns to a university degree for a large portion of the population. The surge of graduates created fierce competition for a limited number of white-collar jobs, giving employers more power to keep entry-level salaries low.

Simultaneously, underemployment has become a widespread issue, a form of insecure employment that has significant public health effects ([8]). As shown in Table 2, 30% of urban tertiary workers were considered underemployed in 2020, working in jobs that did not match their level of education ([24]). The public sector has become a major employer for this group, hiring 35% of graduates, often in administrative roles with limited career growth ([22]). This inefficient use of human capital has broad socioeconomic impacts. For graduates, financial insecurity and unmet career goals can cause dissatisfaction and prevent them from investing in housing, healthcare, or further education. For the economy, it means a large loss of potential productivity and innovation, since the advanced skills of millions are not fully used. This situation can be especially serious for women, who often face additional vulnerabilities in the labor market during economic downturns ([20]).

A significant unintended result of the HEEEP was a sharp decline in the prestige and enrollment of vocational education and training (VET). As societal and family aspirations shifted toward university degrees, VET pathways became stigmatized as a secondary or inferior choice. As shown in Table 3, enrollment in vocational schools dropped by 35% between 2000 and 2020, decreasing from 5.2 million to 3.4 million students.

Table 3. Vocational training decline and skilled labor deficit (2000-2020).

This decline has led to a severe shortage of skilled technicians and tradespeople, resulting in an estimated annual deficit of 8 million high-skilled workers ([22]). Industries vital to China’s “Made in China 2025” initiative, such as advanced manufacturing, robotics, and construction, continue to face ongoing labor shortages that hinder productivity and innovation. The shortage of trained electricians, precision machinists, and IT support specialists creates bottlenecks in production processes and increases operational costs for businesses. This erosion of the skilled technical workforce is a significant structural weakness for the Chinese economy, undermining its goals for industrial upgrading and technological independence. The challenge involves not only the numbers but also the need to adapt training programs to new technological paradigms, like integrating artificial intelligence into various industries ([6]).

The most urgent need is to close the gap between university curricula and the changing needs of the modern economy. Higher education institutions must go beyond traditional, theory-focused programs and build stronger connections with industry. This can be achieved by creating industry advisory boards to help shape curriculum development, especially in fast-growing fields like artificial intelligence, biotechnology, and renewable energy. Universities should partner with leading tech and energy companies to develop specialized courses, micro-credentials, and degree programs that directly match current and future skill needs, as the content of education directly impacts graduates’ earnings ([10]). Additionally, establishing national frameworks for certifying technical and advanced skills would ensure that graduates have verified, portable competencies, improving their employability and workforce readiness.

Reversing the decline of vocational education is essential for solving China’s skilled labor shortage. This calls for a multi-faceted approach to improve VET’s quality and public perception ([12]). The government should work with industry leaders to modernize VET institutions, updating curricula and equipment to match current industry standards ([4]). Promoting specialized programs in high-demand fields like engineering, IT, and advanced manufacturing will ensure graduates gain practical, job-ready skills. Financial incentives, such as subsidies, tax breaks, and scholarships for students in sectors with severe skill shortages, could significantly increase enrollment; however, the impact of these incentives can depend on other labor market factors ([15]). Public awareness campaigns are also necessary to fight the social stigma of vocational careers and present them as respectable and profitable options.

To mitigate the brain drain from inland regions and promote balanced development, policies must focus on making these areas more attractive to skilled graduates. This includes providing strong financial incentives for businesses that establish or expand operations in inland provinces, such as tax reductions and subsidies. Investing in high-speed digital infrastructure is equally crucial, as it enables remote work and connects inland economies to national and global markets. The ability to perform work remotely was a key factor in mitigating job losses during the COVID-19 pandemic and can be leveraged to reduce geographic employment gaps ([17]). Furthermore, establishing “centers of excellence” and research hubs at inland universities, supported by scholarships and competitive funding, can help attract and retain top talent locally. These centers can become catalysts for innovation, allowing inland regions to develop competitive advantages in niche industries.

Fostering deeper collaboration between employers and educational institutions is crucial for closing skill gaps. Policymakers should actively promote and support internships, apprenticeships, and co-op programs jointly managed by businesses and universities ([5]). These initiatives give students valuable industry experience and prepare them to enter the workforce after graduation. Labor market programs like apprenticeships and other youth initiatives have effectively addressed precarious employment, which aligns with a study by [8]. For example, Germany’s dual vocational education and training (VET) system, which combines classroom learning with company-based apprenticeships, successfully creates a highly skilled workforce that meets industry demands. Additionally, creating industry-led guidelines for competitive wages and benefits in high-growth sectors can help attract and keep talent, reduce turnover, and boost job satisfaction.

As China advances its goals for carbon neutrality and sustainable development, the education system must prepare a workforce capable of leading this green transition ([23]). This involves investing in new academic and vocational programs focused on renewable energy, environmental engineering, and sustainable resource management. The need for more sustainable and resilient systems has been highlighted by recent global crises, underscoring the urgency of this transition. These programs should emphasize practical training in solar panel installation, energy efficiency auditing, and circular economy principles. By proactively training professionals for green industries, China can address emerging skill shortages and build the human capital needed to reach its ambitious environmental targets.