This year’s youth employment rate likely to fall below 40%

Ms. Kim, 30, has been jobless for four years since she quit working at a small publishing company in 2009. She who graduated from a prestigious university in Seoul quit the job out of a hope that she could work at a big company. She sent her resume for more than 20 big companies every year but failed to get a job. She keeps sending her resume only to large companies although people around her persuade her to apply for a small or mid-size company. She said, “I can’t sleep well because I’m so worried about getting a job but I keep applying for large companies because I’ve spent so much time on preparing for this.”

As the number of jobseekers competing for a limited slot of jobs at large companies like Kim increase, the youth employment rate (between ages 15 and 29) is forecast to fall below 40 percent this year for the first time. This is mostly due to a job mismatch. College graduates apply for only large companies and small-and mid-size companies have few applicants. The government has not found a solution to this issue.

○ Youth employment rate is likely to fall below 40 percent.

Statistics Korea said on Sunday that the average youth employment rate for the first eight months of this year was 39.7 percent, which fell 1.1 percentage points year-on-year from 40.8 percent.

Korea’s average youth employment rate was the lowest in 2010 with 40.3 percent. It has never been lower than 40 percent. If the rate keeps moving downward, the current administration is unlikely to achieve the employment rate of 70%, which is the only goal that it proclaimed with a number.

Kim Sun-bin, a fellow researcher at Samsung Economic Research Institute, said, “The government plans to generate jobs for youths and women to achieve its 70 percent employment goal,” adding, “If the youth employment rate falls from the first year of the administration, it might be challenging to push through its job creation policy.”

○ The cause is job mismatch

The government is aware of this and tries to find a solution but it is challenging.

“We’re well aware that the falling youth employment rate is a serious problem but we cannot find a silver bullet,” a source from the Strategy and Finance Ministry said, adding, “We’ll work hard to reduce the job mismatch, which seems to be the main cause of the problem.”

Hyun Oh-seok, deputy prime minister and strategy and finance minister, said recently, “We’ll let state-owned companies to employees who worked at small- and medium-size companies for over three years.” This might cause a new problem such as the outflow of employees from small companies, but the government sees it inevitable to address the mismatch.

The government also pins a hope on “work-based learning system” which will start next year. It is a program that will allow graduating seniors at high schools and colleges can get a degree after getting on a job. It will take place at 1,050 companies and cost 22.1 billion won (20.6 million US dollars).

“A decline in youth employment rate is a unique phenomenon in Korea because college graduates spend years after graduation on preparation without actually seeking a job,” Yoo Gyeong-joon, chief economist at Korea Development Institute, said, adding, “The government needs to increase the falling youth employment rate through policies such as open employment or work-based learning system.”