It is time to employ temporary stimulus to respond to changes in demographics and at the same time to pursue restructuring across industries, education and job markets to achieve sustainability.
Young adult unemployment has been on the rise since 1990’s, increasing faster compared with total unemployment, and young adult real unemployment has stayed over 20 percent since records began in 2015. Reasons behind this trend are structural as demand continues to decline and mismatches between job openings and job seekers grow.
- Jobs young adults look for have been decreasing as technology advances. Furthermore companies hire more experienced workers.
- Private sector job markets have been sluggish: Demand from major industries decrease and demand from new growth engines is still low.
- Large corporations have created less and less jobs since the Asian financial crisis in 1998 as they reach business maturity.
- There has been a huge mismatch between job openings and job seekers, for 69 percent of Korean young adults are college graduates and they seek jobs which require higher education
- Labor markets are not flexible enough for young adults to find permanent jobs due to the high level of job security for permanent positions.
There are also demographical reasons, yet temporary, which have contributed to the high unemployment among young adults: Eco-boomers have been entering the job market, and their entry to the job market will peak in 2018.
Short-term measures focus on creating 180,000？220,000 jobs additionally until 2021, during which eco-boomers will newly enter the job market, with a young adult unemployment target of around 8 percent by 2021. The measures will include incentives to increase private sector jobs and temporary fiscal support. The four areas of the framework are:
- Help increase the income of young SME employees
- Promote startups
- Provide new opportunities: Promote new industries, such as the sharing economy and remote healthcare, as well as help find jobs overseas
- Strengthen job training: Launch job training programs for young adults in their mandatory military service, and promote work-study programs
Long-term measures focus on pursuing ‘growth through innovation’, improving regulations and education, and increasing labor market flexibility.
* For further details, please refer to the attached file.