Supply-Demand Mismatch Causing Youth Unemployment

A graduate of a prestigious private university in Seoul with a degree in business administration, 31, was hired as an intern by a state-run corporation for three months and worked at a large global IT company for a year.

He then worked for a global consulting firm for a while then quit. He remains jobless.

As a “jobseeking grasshopper” who looks for better jobs with their competitive resume, he said, “When you work for a state-run or foreign company that people say is good, you grow unwilling to work there because you end up getting only little money in your hands. It`s hard to get a job you really like.”

A graduate of a public university in the provinces with an economics degree, 27, has been looking for a job for four years. “Since graduates of colleges in Seoul abound, you cannot even think of applying for a decent job,” he said. “I don’t want to go to a small company so this is why I have no choice but to study.”

Youth unemployment is turning into a serious social problem as more of the jobless opt to wait to get a job that meets their expectations. Experts say the imbalance in supply and demand, where the number of decent jobs decreases while that of college graduates increases, is a structural problem.

According to a report on raising youth employment released by the Federation of Korean Industries Tuesday, the number of jobs young people want such as civil servant and staff member at a company with more than 300 employees and at a financial institution fell from 4,127,000 in 1995 to 3,724,000 in 2008, a drop of 403,000.

In particular, the number of jobs at large companies with more than 300 employees dropped from 2,511,000 to 2,089,000 over the same period.

The number of college graduates, however, increased from 330,000 to 560,000 over the same period. The national college enrollment rate rose from 51.4 percent in 1995 to 83.8 percent in 2008. While the number of youths seeking better jobs increased, the number of such jobs decreased.

Despite rising unemployment, small and medium-size companies still suffer from a labor shortage as college graduates expect more. The Korea Employment Information Service found that young people seek 27.27 million won (24,050 US dollars) in annual salary, but smaller companies can pay only 20.1 million won (17,720 dollars).

Because of the wage difference, smaller companies complain of a shortage of around 250,000 workers.

Another cause of youth unemployment is the gap between college curriculum and industry. For example, the LED sector needs 5,000 experts per year but colleges produce only 800.

foryou@donga.com