Internships at Smaller Companies

The term “cheong-nyeon-shil-shin” has appeared in referring to the difficulty in getting jobs by those aged 15-29. It describes the gloomy situation where youths either become jobless or credit delinquents after graduating from university. Over the first half of the year, some 280,000 new jobs were created but the number of jobs for youths declined 30,000. Last month, youth unemployment was 8.3 percent, 2.4 times higher than that of overall joblessness (3.5 percent). Samsung Economics Research Institute said real youth unemployment is 23 percent if 1.16 million youths having difficulty getting jobs, including those preparing to search for work and those economically inactive for unclear reasons, are added to the figure of 370,000 jobless youths.

Despite the rise in youth unemployment, small and mid-size companies have difficulty finding workers. According to a survey by the Korea Employment Information Service, 65 percent of such companies have failed to find the right staff despite posting help wanted ads. Excluding unskilled labor, 150,000 jobs at such companies remain unfilled. One reason for this situation is the high expectations of young people for jobs. They also avoid working for smaller companies based in the provinces. In 2007, the expected annual pay by college graduates was 29.5 million won (24,900 U.S. dollars) but the salary they got was 22 million won (18,600 dollars). The gap between the expected and real wage was 34 percent, more than double the figure of 16 percent in 2002.

Youth internship programs are helping to resolve the mismatch. The government provides financial assistance of 800,000 won (675 dollars) per person for six months to smaller companies that hire young interns. If the interns are hired permanently, the companies get additional assistance of 650,000 won (549 dollars) per worker for six months. Innobiz, an association of technologically innovative small and mid-size companies, says 91 percent of the estimated 2,450 young interns last year became regular workers. Association head Park Hyun-gil said, “Small and mid-size companies don’t want to lose youth interns, who have learned the job to an extent, and youth interns are satisfied with their jobs and want to remain.”

The central and provincial governments have set up five-month administrative internships. The programs, however, have invited criticism for wasting money since the interns are given sundry work. Internships run by small and mid-size businesses, however, play a bridging role between youths having difficulty getting jobs and small and mid-size businesses struggling to find workers. In a sense, providing financial assistance to companies that will hire workers anyway is a waste of money. Park said, however, “More assistance is needed for promising businesses by assigning more young interns.”

Editorial Writers Hong Kwon-hee (konihong@donga.com)