[Initial Insight] Bleak Outlook for Korean Youth... Active Labor Market Needed

[Asia Economy Reporter Kwangho Lee] "Do you know the neologisms '50-3-1 rule,' 'Chwireuni,' and 'Samiljeol'?"

The 50-3-1 rule means that you need to submit 50 job applications to get three final interviews and receive one job offer. Chwireuni is derived from Chwirini (children preparing for employment) and refers to adults preparing for employment who, despite postponing graduation and focusing on building their credentials due to the job market crisis, fail to get a job and only grow older. Samiljeol means that once you pass the age of 31, you can never get a job. All these neologisms reflect the despair felt in the harsh employment reality, making them bitter.

According to the 'OECD Youth Employment Indicators' analyzed by the Korea Economic Research Institute, while youth unemployment rates in major countries have improved over the past decade, Korea's situation is bleak to the point of being tragic. As of 2018, the average number of unemployed youth (ages 15-29) in OECD countries decreased by 13.9% compared to 2008, whereas Korea's youth unemployment increased by 28.3%. As a result, Korea's youth unemployment ranking among the 36 OECD member countries fell from 11th to 22nd. Korea's youth unemployment rate has risen higher than during the global financial crisis, moving in the opposite direction from major OECD countries.

Moreover, according to the 'June Employment Trends' released by Statistics Korea on the 15th, the youth unemployment rate soared to its highest level in 21 years since the 1999 financial crisis. In particular, the Employment Supplementary Indicator 3 (expanded unemployment rate), which reflects the perceived unemployment rate among youth, approached 27%, marking the highest level since statistics began. This is why there are forecasts that the OECD-standard youth unemployment rate will be worse than it is now. The youth unemployment rate has worsened more severely than other age groups, likely because the jobs they mainly seek were heavily impacted by the COVID-19 pandemic.

Looking at employment numbers by industry last month, the accommodation and food service sector decreased by 186,000 compared to the same period last year, continuing its downward trend. Wholesale and retail trade and education services also decreased by 176,000 and 89,000, respectively. These industries are characterized by a high proportion of part-time jobs, which many young people take. Additionally, companies' reduced or postponed hiring plans have dealt a significant blow. The population that 'rested'?those who could work but did not seek jobs for no clear reason?increased the most among people in their 20s (91,000 people, 28.1%), supporting this view.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, evaluated on Facebook immediately after the employment trend announcement, "Overall, there is a slight recovery from the COVID-19 shock since April as a low point, but uncertainties remain high due to domestic and international quarantine situations," adding, "It is painful that the employment recovery of the youth, who have been more affected by COVID-19 than other age groups, is slow."

The government is currently supporting the youth through measures such as the Employment Success Package and Youth Job-Seeking Activity Support Fund. However, many criticize these as temporary, one-off measures that only help endure the 'employment hardship period.' Lawmakers are rushing to propose related bills. Kim Cheol-min of the Democratic Party plans to lead the 'Youth Support Three Acts' to support young people struggling with high youth unemployment and student loan burdens. Park Beom-gye of the same party introduced a bill to amend the Youth Basic Act to introduce a Korean-style 'gap year' as his first bill.

Anything for the youth is good. I recall a recent conversation with Sung Kyung-ryung, Chairman of the Korea Institute of Public Finance and Humanities and Social Sciences. Chairman Sung said, "Youth are the generation that gives birth to and raises future successors, so the issue of childbirth is no longer a social issue but a public good." In other words, more proactive labor market policies by the government are necessary.