Hidden figures and youth unemploymentThe seeming discrepancy between the figures and reality stems in part from the fact that the traditional unemployment rate only captures unemployed people who have actively sought employment in the past four weeks and were ready to start work immediately. Persons who would have liked to have started work but have not actively looked for a job in the past four weeks are not included here, such as job seekers who have taken a short vacation. If this “potential labor force” is taken into consideration, the combined unemployment rate, the so-called hidden unemployment, doubles.
One of the biggest concerns in South Korea is that both unemployment and hidden unemployment are particularly high among young people. Not only was the youth unemployment rate twice as high as the overall unemployment rate, but the combined rate of youth unemployment and potential labor force even exceeded 20 percent in 2020.
The job market situationThe reason behind this situation is multifaceted and can be attributed to various economic, social, and labor-market specific factors. The employment inducement coefficient, the number of people who become employed for one billion South Korean won in final demand for industrial goods and services, has steadily declined in recent years. This means that fewer jobs were created despite economic growth. The job offering to job-seeking ratio has also fallen steadily in the last few years. On the employer’s side, more and more companies are requiring concrete work experience, which is difficult to acquire in the existing education system. Despite South Korea’s very high university enrollment rate, it is difficult for many graduates to quickly enter the workforce.
The outbreak of the COVID-19 pandemic in 2020 and its economic consequences have significantly worsened the overall employment situation in South Korea. Yet this is not a new phenomenon. It is not without reason that tackling youth unemployment is one of the most important election promises in South Korean presidential and parliamentary elections. Particularly given the rapidly aging society, getting a grip on youth unemployment is and remains one of the country's major challenges.