Young people are finding it increasingly difficult to secure stable jobs, even as they lower their employment expectations. The shift in the industrial structure towards semiconductors and the expansion of artificial intelligence (AI) have contributed to a decline in youth hiring, while the rate of transitioning from unstable to stable jobs has also decreased.
According to a report titled 'Youth Employment Challenges and Policy Tasks' released by the Bank of Korea on October 26, the unemployment rate for young people aged 15 to 29 rose from 6.4% in 2022 to 6.6% in the first nine months of this year, while the employment rate fell from 46.6% to 43.7%.
However, compared to the youth employment slump from 2014 to 2019, these quantitative indicators are relatively better. The average unemployment rate during that period was 9.4%, while the average since 2023 has been 6.1%. Analysts suggest that while young people previously waited for quality jobs, there is now a stronger tendency to enter unstable jobs with lowered expectations.
The quality of employment is a significant concern. The quality index for youth employment, which considers job stability, working hours, and the risk of unemployment, averaged below 95 points from January 2023 to September 2023. This index is based on a scale where the average from January 2010 to September 2023, excluding the COVID-19 period, is set at 100.
The proportion of temporary and part-time workers among young employees has increased, and more young people are choosing part-time work involuntarily. While the desire to work for large companies and public institutions has decreased, the preference for small and medium-sized enterprises has risen, indicating a trend of lowering job expectations.
The barriers to entering stable jobs have also increased. An analysis comparing the entry rates of young people to those of the core age group (30 to 59 years) revealed that the relative entry rate for young people has decreased by 15% to 20% from 2023 to 2026.
It has become more challenging for young people to transition from unstable to stable jobs. An analysis of permanent positions in private companies with over 300 employees classified as the primary labor market showed that the transition rate from the secondary labor market to the primary labor market for young people dropped from around 8% between 2014 and 2019 to about 5% in 2023 and 2024. Conversely, young people who have entered stable jobs are increasingly likely to remain in their current positions.
The Bank of Korea identified the restructuring of the industrial structure, centered on information technology (IT) manufacturing, as a key reason for the youth employment challenges. While sectors like semiconductors drive economic growth, permanent job creation is concentrated in non-IT manufacturing and service industries, limiting the employment impact of this growth.
Additionally, a rigid labor market structure has contributed to the issue. Companies are adjusting their workforce by reducing new hires instead of maintaining existing employees, placing a heavier burden on young people entering the labor market for the first time. The expansion of AI has also led to a preference for experienced workers, reducing the demand for entry-level and basic tasks previously handled by young employees.
The Bank of Korea expressed concern that even if labor demand recovers, young people may remain in unstable jobs for extended periods without developing job skills, potentially prolonging employment challenges. They recommend improving industrial policies and labor market structures to facilitate smoother entry and mobility for young people in the labor market.
Jung Sung-yeop, head of the employment trends team at the Bank of Korea, stated, "If the labor market is too rigid, the overall demand for labor in the primary labor market will decrease. If the labor market becomes more flexible, there is potential for increased demand in the primary labor market, which could positively impact youth employment."
* This article has been translated by AI.
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