Back To Top

[EDITORIAL] Youth unemployment

[THE INVESTOR] A year ago, the government publicized its plan to create more than 200,000 jobs for those aged between 15 and 34 by 2017 in collaboration with six major business associations.

Besides that, over the past few years, Korea’s economic policymakers have come up with another set of countermeasures to tackle the lingering youth unemployment problem.

So far, however, the measures have yet to put a big dent in the issue.

Last month, the nation’s youth unemployment rate reached 10.3 percent. This marked the highest in 17 years, when comparing June figures, since it peaked at 11.3 percent in June of 1999. According to Statistics Korea, the jobless rate among those aged between 15 and 29 grew by 0.1 percent, or 18,000 people, in June 2016 compared to the same month in 2015.

During a recent report to the National Assembly, Finance Minister Yoo Il-ho mentioned the tight job market. He said that officials have come to the conclusion that the government needs to preemptively implement an expansionary fiscal policy through the allocation of extra spending, as unemployment from corporate restructuring is becoming a bigger problem.

But he has not delivered any particular comment on “youth” joblessness.

Earlier programs during the Park Geun-hye administration were designed to make jobs offered by small and mid-size enterprises 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 this perception changes. To change it, high-growth SMEs that create decent jobs need to be fostered, but this will take time.

In the meantime, the nation needs to find an easier route. An effective way is to develop the service sector. Some policymakers claim that the government could create some 700,000 jobs in the service sector by 2030, only if lawmakers pass the motion on service industry development.

The bill has been pending in the National Assembly for more than four years.