[Viewpoint] Young People Deprived Even of the Chance to Fail at Getting a Job

Choi Joon-sun, Honorary Professor at Sungkyunkwan University School of Law

Jobs for young people are disappearing. According to a survey by the Korea Economic Research Institute, 7 out of 10 large companies have no hiring plans for the second half of this year, and more than half of university students about to enter the workforce worry about becoming unemployed due to lack of jobs. One in three young people is effectively unemployed. The unemployment rate perceived by young people was 25.4% as of September 2020. As of May this year, the number of young people who have not found employment after graduation reached a record high of 1.66 million. Job seekers about to graduate have lost a year due to the novel coronavirus infection (COVID-19), and their anxious situation, where they do not even have the chance to fail, is truly pitiful.

Compared to other countries, youth unemployment in Korea is more severe. Among 37 OECD countries, only six countries have seen an increase in youth unemployment over the past decade, with Korea (+0.9%p) ranking third after Greece (+10.1%p) and Italy (+4.0%p), both of which experienced financial crises. Korea’s youth unemployment rate dropped 15 ranks from 5th in 2009 to 20th in 2019 among the 37 OECD countries. Since April, when employment difficulties due to COVID-19 were most severe, the number of employed people decreased at the fastest rate in six months, and the unemployment rate is the worst in 20 years. Employment has decreased among people in their 20s to 50s, while only those aged 60 and over have seen an increase for eight consecutive months.

The cause lies in excessive regulations and a rigid labor market. Malignant regulations include the 2-year limit on dispatch usage periods and work restrictions, the obligation of direct employment after exceeding the usage period, the 2-year limit on fixed-term employment and the presumption of indefinite contracts after exceeding the usage period. The conversion of about 190,000 non-regular workers in the public sector to regular workers (2017?2020) and the expansion of paid annual leave obligations for workers with less than two years of service (from 15 days to up to 26 days) have also dealt heavy blows. The implementation of the 52-hour workweek reduction (phased by company size from July 1, 2018) and a 32.8% increase in the minimum wage over three years (from 6,470 won in 2017 to 7,530 won in 2018, 8,350 won in 2019, and 8,590 won in 2020) are also major challenges for companies. The list goes on endlessly.

Amid this, reckless legislative competition adds insult to injury. These include the 'Government Labor Union Act Amendment,' the 'One-Month Severance Pay Bill,' and the 'Mandatory Direct Employment for Regular Tasks Bill.' The 'Government Labor Union Act Amendment' mainly allows unemployed and dismissed workers to join unions and provides wages for union officials. If this amendment passes, union power will be strengthened while employers’ countermeasures are limited, further increasing labor market rigidity and shrinking new hiring.

To support cooperative labor-management relations and expand new hiring capacity, the rights of employers to counteract, such as a complete ban on workplace occupation during strikes and the use of replacement workers, should be guaranteed as in major countries like the United States, the United Kingdom, Germany, and France. The severance pay system should pay only workers with more than one year of service, with the employer bearing the full cost. However, if severance pay is paid after just one month of work as proposed in the 'One-Month Severance Pay Bill,' the cost will fall entirely on employers, reducing their capacity to hire new workers. Notably, more than half (58.9%) of workers who leave within one year are concentrated in workplaces with fewer than 50 employees. Therefore, new jobs in small and medium-sized enterprises are most at risk. To avoid paying severance, employers would have to dismiss workers on the 29th day. Jobs for socially vulnerable groups without specialized skills will become even more unstable.

The 'Mandatory Direct Employment for Regular Tasks Bill,' which prohibits indirect employment such as subcontracting, dispatch, and consignment for regular tasks and presumes direct employment if violated, also risks shrinking new hiring. Mandatory direct employment restricts companies’ free workforce management. After the implementation of the fixed-term and dispatch worker laws in 2007, which limited the use of non-regular workers, workplaces with a high proportion of fixed-term and dispatched workers saw a 3.2% decrease in total employment. If the amendment passes, the same will inevitably happen again. The Federation of Korean Industries called these three bills the 'Three Laws of Youth Despair' in a report published on the 10th. 'Three Laws of Youth Despair' is probably the most polite name that can be given. These bills will surely take away the hope of young people living in this era and become a huge obstacle to the future of the Republic of Korea.