The government has come up with another set of measures to tackle the worsening youth unemployment problem. The package, the sixth of its kind put forward by the incumbent government, however, is unlikely to put a big dent in youth joblessness.
The measures came after the unemployment rate for young adults hit an all-time high of 12.5 percent in February. The rate edged down to 11.8 percent in March, but it was still the highest on record for the month.
Officials of the Employment Ministry say the latest package differs from the previous ones in that it focuses on the demand side of the employment equation, that is, young job seekers, instead of the supply side -- companies that create jobs.
The shift reflects a belated realization that the large number of programs that have been introduced to incentivize companies to increase the hiring of young people failed to meet expectations.
Many companies were found to have used the diverse employment subsidies and tax benefits from the government simply to reduce their labor costs rather than hiring more young employees.
The new approach focuses on encouraging young people to land jobs at small and medium-sized enterprises by helping them build wealth.
Under the plan, a young person who gets a job at an SME and puts away 3 million won for two years would have 12 million won ($10,500) in their bank account after two years of work, as the government and their employer will additionally offer 6 million won and 3 million won, respectively.
This wealth-building scheme appears to be more practical than other programs in place. Yet whether it will be effective in reducing youth unemployment remains to be seen.
The program is intended to make SME jobs look more attractive to young job seekers by narrowing the wide salary gap between employees of conglomerates and SMEs. On average, workers at SMEs only make about 53 percent of what their counterparts at large companies earn.
While the subsidies from the government and employers are substantial, they do not seem to be sufficient to motivate young people to take up SME jobs.
Furthermore, the salary gap is not the only factor that makes young people shun SMEs. College graduates avoid jobs at SMES because they are aware that it is difficult to move to high-paying jobs at big corporations once they start their careers at SMEs.
Young job seekers will not apply for SME jobs unless their perceptions of SMEs change. To change their perceptions, it is necessary to foster high-growth SMEs that create decent jobs. Yet it takes time to cultivate such companies.
An easier way to create jobs for young people is to develop the service industry. The government says it would be able to create some 700,000 jobs in the service sector by 2030, only if the National Assembly passes its bill on service industry development.
Recently, Rep. Ahn Cheol-soo, leader of the minor opposition People’s Party, proposed to set up a parliamentary panel to discuss measures on job creation. The three political parties are advised to make haste to establish the panel and act on the bill without further delay.