Locked out
: Economic growth leaves doors closed to Korea's next generation of workers
A rising tide of exports can lift an economy's headline figures without opening the door to its next generation of workers. South Korea's September employment report illustrates that disconnect.
Overall employment expanded for a third successive month as manufacturing snapped a two-year contraction, according to the Ministry of Data and Statistics. Yet employment among people aged 15 to 29 fell for the 47th straight month.
The recovery is improving corporate balance sheets without creating enough openings for young people entering the workforce.
The number of young employed people dropped by 147,000 from a year earlier, and their employment rate slipped to 44.0 percent. The youth unemployment rate climbed to 5.4 percent even as the national rate edged down to 2 percent, its lowest September reading since records began in 1999.
Changing the statistical definition of youth offers little relief. Under a revised law, the government now publishes figures for people aged 15 to 34 alongside the established 15-to-29 category. The broader group recorded a smaller employment decline of 98,000, partly because people in their early 30s tend to have more stable jobs.
Publishing both measures is useful; however, allowing the more flattering figures to shape public perceptions would be misleading.
The deeper problem lies in the nature of hiring. Employers facing uncertain demand and pressure to improve productivity have reason to favor experienced workers who require less training.
Automation and artificial intelligence may also be reshaping entry-level work, although their precise contribution to recent employment declines remains unclear. What is clear is that employment has contracted in fields such as information and communications and professional services, where many young graduates seek career-track positions.
The country's labor market compounds these difficulties through rigid pay structures and a sharp divide between secure positions and temporary employment.
Firms may hesitate to recruit inexperienced workers when adjusting wages or staffing later proves difficult. Plans to extend the statutory retirement age add another complication.
Older workers deserve adequate income and longer working lives where feasible, but extending tenure without reforming wage systems or protecting recruitment opportunities could intensify competition for positions sought by younger applicants. This is why the government must weigh retirement policy alongside measures to expand entry-level hiring.
The government's response should begin by distinguishing temporary relief from high-quality jobs. Cash assistance and publicly funded placements can help people through periods of hardship. Tailored training and work experience can also improve their job prospects.
The success of such programs should be measured by sustained employment, rather than spending totals or enrollment figures. Subsidies cannot generate sustained demand when businesses lack incentives to expand.
Private-sector growth offers a more promising foundation. Korea's semiconductor boom demonstrates the limits of relying on export earnings from industries that create relatively few jobs in proportion to their output.
High-value services, from technology-enabled business solutions to advanced K-beauty, could create broader job opportunities by building on the country's industrial strength.
That potential requires fewer barriers to new services, stronger links between vocational education and employers' actual needs, and regulatory reform that enables promising businesses to expand.
The government's planned nationwide employment initiative will mean little if it simply adds more short-lived public work schemes. Meaningful progress demands labor reforms that reduce the disincentives to hiring, together with industrial policies that stimulate private investment and demand in innovative sectors. Neither task can be accomplished through public spending alone.
Economic performance is often judged by exports, investment and output. Long-term growth, however, depends on whether people can find a first foothold in the productive economy.
An economy that leaves its young workers stranded outside the workforce may post impressive growth figures, but it does so at the expense of its own future prosperity.
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