BEIJING (Reuters). -China is offering subsidies and tax breaks to college graduates to increase their prospects. The announcement was made Friday as a record amount of students prepares to enter the workforce amid the downside economic risks posed by COVID-19 curbs.

Small firms are eligible for the subsidies, and graduates who set up start-ups will be entitled to tax breaks, better loan terms and rent-free apartments, according the General Office of the State Council (or cabinet) in a notification.

It stated that China encourages COVID-hit employers to sign online labour agreements with college graduates. This is in addition to promising assistance for small and medium-sized enterprises who hire more college graduates.

China is committed to the development of an online platform economy. This refers to a large source of employment, which China considers crucial in a world where a record 10.76million students are expected to graduate college.

The notice stated that “Red and green lights” will be installed to encourage healthy economic development and create more jobs.

The worst COVID-19 epidemics in the past two years have increased the stress on students and threatened small businesses that make up the second-largest economy.

China’s Omicron coronavirus variant has been pushed to the forefront of the “dynamic clearing” strategy. This policy led to partial or full lockdowns across dozens of Chinese cities.

Especially small businesses were affected by the disruptions in services and logistics.

China hopes to create more than 11 million jobs in cities this year. That number will rise to up to 13 million, Premier Li Keqiang stated March. However, he recently described the state of employment as “complicated and dark.”

Li stated, “Stabilizing the employment is essential to people’s livelihood, it is also the key support to the economy operate within an acceptable range.” In remarks made for a Saturday teleconference, Li spoke to provincial leaders.

China’s urban survey jobless rate was 5.8% in March, which is the highest level in almost two years. The rate of job-seekers aged 16-24 reached 16.0% in March, according to official data.

According to Capital Economics analyst Julian EvansPritchard in a Thursday note, policymakers need to focus on getting the labour market on the right track for economic growth.