Future in Doubt

Youth unemployment drops to historic low, but outlook for 2014 still looking dim.
Youth unemployment drops to historic low, but outlook for 2014 still looking dim.

 

The Korea Chamber of Commerce & Industry (KCCI) said on June 29 that the youth unemployment rate in Korea would rise from 9.5 percent to 9.7 percent and then to 10.2 percent between this year and 2017 with college graduates outnumbering retirees due to the extension of the retirement age.

The number of those going to college exceeded 360,000 last year, when the entrance rate reached 70.9 percent. Meanwhile, the number of those getting a job with a high school diploma declined, from approximately 260,000 to 220,000 between 1990 and 1996 and to 60,000 or so last year. The number of college graduates is estimated at 319,000 in 2016, 317,000 in 2017, and 322,000 in 2018.

The job market is predicted to contract during the three years as the retirement age extension to be put into place for a couple of years from 2016 causes the number of retirees from large corporations to decline from 16,000 for this year to about 4,000 for each of 2016 and 2017. That of those retiring from smaller firms is decreased from 175,000 to 38,000 and 40,000 during the same period, too. The KCCI predicted that the youth unemployment rate would reach 9.7 percent next year, 10.2 percent in 2017, and 9.9 percent in 2018 unless the imbalance in demand and supply was properly addressed.

The KCCI suggested earlier career guide as a solution. “More than 400,000 college and graduate school graduates are flowing into the job market but the number of the decent jobs they can be satisfied with is limited to 160,000, 18,000 in the government, 22,000 in state-run enterprises and 120,000 in the top 30 business groups,” it explained, adding, “This means we need to inform them that a college diploma does not necessarily lead to a better job anymore.”

It also advised that wage peak be better utilized so the job market can be widened. “We need to refer to the case of Japan, where labor and management agree to bring in wage peak for the co-prosperity of different generations,” it said. As its third solution, the KCCI mentioned startups. “The ratio of firms established by young people amounts to 10 percent in the United States and 2.3 percent in China but is less than 1 percent in Korea,” it continued.

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution