"I Earn 40 Million Won a Year, But Need 6.9 Million More to Give Up a 'Seoul Job'" [BOK Focus]

"An Extra 17% Salary Is Needed to Move"
Three Keys to Solving the Youth Labor Shortage in Provincial Areas
Additional Compensation Not Statistically Significant for Daegu-Gyeongbuk Youth
Strategic Focus Needed on Targeting Local Youth Within the

It has been found that young people nationwide would require additional compensation equivalent to about 17% of their current annual salary to work in a provincial city (such as Pohang) instead of working in Seoul or the greater metropolitan area. For a young person with an annual salary of 40 million won, this means an extra 6.9 million won, and for someone earning 50 million won, about 8.7 million won more would be needed. This analysis suggests that working in a provincial area represents a significant opportunity cost for young people.

To address the shortage of young workers in provincial areas, experts point to the need for a ‘strategic focus’ that prioritizes targeting young people within each region. To this end, companies should significantly strengthen industry-academia cooperation with local universities, while local governments should expand support for companies that hire interns for more than six months. At the same time, accelerating the transition to new industries such as IT, artificial intelligence (AI), and secondary batteries is necessary, along with comprehensive improvements to living conditions centered on healthcare and transportation.

Significantly Strengthen Industry-Academia Cooperation with Regional Universities... Expand Support for Companies Hiring Interns for More Than Six Months

These are the main findings of a research report, "Analysis of Regional Job Preferences Among Young People - Focusing on Pohang," jointly conducted by Professor Choi Seungjoo of Seoul National University’s Department of Economics and Professor Kwon Oik of Korea University’s Department of Economics (former Head of the Pohang Planning and Research Team at the Bank of Korea), and published on the Bank of Korea’s website. The study surveyed 3,010 respondents, including a nationally representative sample of 2,010 and an additional 1,000 from the Daegu-Gyeongbuk region. Participants were asked to choose among hypothetical workplaces based on 11 attributes, including location, industry, salary, housing support, work-hour flexibility, corporate culture, and infrastructure for education, healthcare, commerce, transportation, and leisure/culture.

Notably, while young people nationwide demanded 17% additional compensation for working in provincial areas, the willingness to pay for working in Pohang among young people in the Daegu-Gyeongbuk region was not statistically significant. This suggests that geographical proximity and awareness of the regional industrial ecosystem play a decisive role in young people’s willingness to accept jobs in provincial areas.

These results lead to the conclusion that regions seeking to attract more young people should strategically focus on targeting young people within their own region. The research team stated, "To attract young people to the Pohang area, industry-academia cooperation with universities in the Daegu-Gyeongbuk region must be significantly strengthened," adding, "Systematic programs such as field training for students at major regional universities-including Kyungpook National University, Yeungnam University, POSTECH, and Handong Global University-and job training in partnership with major companies should be implemented so that students can experience Pohang’s companies and industries while still in school." The establishment of an integrated youth employment platform at the regional level was also evaluated as an effective alternative.

Significantly expanding mid- to long-term internship programs of six months or more was also proposed as a solution. This is based on the finding that young people with more than six months of experience living in a provincial area had a willingness to pay for provincial work that was about 11 percentage points lower than those without such experience. The research team noted, "Short-term internships of one to two months are insufficient to foster a real understanding and attachment to the region, so it is necessary to expand mid- to long-term programs of at least six months," and added, "Local governments should expand support for companies hiring interns for more than six months and provide additional incentives when interns are converted to full-time employees." They also analyzed that it is necessary to strengthen connections with universities to offer academic incentives, such as recognition of field training credits and fulfillment of graduation requirements.

Job seekers attending the '2025 Win-Win Cooperation Job Fair' held last October at COEX Magok in Gangseo-gu, Seoul, are checking the job postings.

Accelerate Transition to New Industries... Comprehensive Improvement of Living Conditions Needed

In the analysis of industry preferences, a strong aversion to manufacturing industries such as steel was observed. Compared to IT or AI industries, an additional compensation of 10.89% (Daegu-Gyeongbuk region) to 11.20% (nationwide) of annual salary was estimated to be necessary to attract young people to manufacturing. In contrast, the willingness to pay for future energy industries such as bio, secondary batteries, and hydrogen was 2.15% (nationwide), which was only marginally statistically significant.

The research team emphasized, "Since aversion to traditional manufacturing industries is consistent across all groups, local governments must continue to pursue visible and rapid transitions to new industries such as IT, AI, and secondary batteries," adding, "In addition to production jobs, there should be an expansion of 'white-collar positions' favored by young people, such as research and development (R&D), design, quality control, marketing, and data analysis. There should also be more active investment in nurturing related startups and creating an innovation ecosystem." They further explained, "The attraction of AI and data centers, as well as the transition to bio and future energy industries in Pohang, empirically demonstrates the positive effect on attracting young talent."

Among the attributes related to living conditions, access to general hospitals and public transportation infrastructure were given the highest value. In regions where access to a general hospital takes more than 90 minutes, an additional compensation of 10.73% (nationwide) and 14.09% (Daegu-Gyeongbuk region) was estimated to be necessary compared to areas where hospitals are accessible within 45 minutes. In areas where a private car is essential due to poor public transportation, an additional compensation of 10.81% (nationwide) and 8.64% (Daegu-Gyeongbuk region) was also found to be necessary compared to areas with well-developed public transportation. Other factors such as commercial infrastructure, leisure and cultural facilities, and educational infrastructure were also analyzed to significantly influence workplace selection.

The research team concluded, "It is difficult for small and medium-sized cities to independently build all the infrastructure for healthcare, education, culture, and leisure to compete with the metropolitan area," and suggested, "It is necessary to pursue approaches such as the OECD’s intensive linkage-based development model (which focuses services in key hub cities in depopulated areas and strengthens transportation connections)."