"Like During the Financial Crisis... COVID-19 May Reduce Youth Employment by 100,000"

Koseop Han, Research Fellow at KDI Knowledge Economy Research Department, "Current Status and Policy Suggestions for Youth Employment"
Discussion on Education Reform Measures Including Strengthening Online Education Should Also Be Conducted

[Sejong=Asia Economy Reporter Kim Hyun-jung] It is projected that the number of employed youth could decrease by 100,000 annually due to the novel coronavirus infection (COVID-19) crisis. This forecast is based on the assumption of an impact level similar to the 2008 global financial crisis, and since the aftermath could be prolonged, there is a need to prepare measures for the youth who fall into the blind spots of government support, such as those unemployed after graduation.

On the 6th, Han Yosep, a research fellow at the Knowledge Economy Research Department who published 'Current Status and Policy Suggestions on Youth Employment,' stated at a briefing held at the Government Sejong Complex that assuming the shock from COVID-19 is at the level of the 2008 global financial crisis, the number of employed youth this year could decrease by 100,000 annually, and the employment rate could drop by 1 percentage point. The youth employment rate, which had been on the rise until January this year, turned downward from February, reaching 41.0% as of March. This represents a 1.9 percentage point decrease compared to the previous quarter and the same period last year.

Research fellow Han forecasted that youth employment would shrink further across all industries, including manufacturing, and expressed concern that young people entering the labor market could suffer long-term damage due to the COVID-19 crisis. In particular, "While we will announce specific figures at the end of May after comprehensive consideration, assuming a situation similar to the global financial crisis, the annual average number of employed youth and the employment rate are expected to suffer this level of impact," he said. "If the current shock prolongs, the generation seeking jobs under such circumstances could experience the same or even greater impact than the generations affected by the past foreign exchange crisis or the global financial crisis."

Research fellow Han emphasized, "If unemployment prolongs, in addition to short-term wage losses, continuous wage losses due to career loss may occur." He added, "The empirical relationship where wages rise steeply during the first 10 years of career after graduation is a global phenomenon, and most of the wage increase is explained by human capital accumulation through work experience and improved matching efficiency." He continued, "Although active discussions are underway to expand social safety nets to reduce blind spots, unemployed youth are still easily excluded." He explained, "Although eligibility for unemployment benefits has been expanded to those with less than one year of subscription, those unemployed after graduation still do not qualify, and they are likely to be excluded from household-level welfare support as well."

Considering the overall situation, he stressed the need to prepare mid- to long-term measures, including education reform, in case the crisis prolongs. He advised, "Even if the health crisis ends domestically in a short period, if external demand shocks continue, it may take considerable time for employment recovery, so measures to create youth jobs are necessary." He added, "Support such as hiring incentives should be expanded focusing on industries with current demand, and recent graduates expected to face employment difficulties should be provided with expanded opportunities for education and training in promising fields such as IT." Furthermore, he emphasized, "There is a need for changes in industrial and workforce development policies to prepare for the expansion of the health and IT sectors," and stressed, "In particular, reforms in the education sector are urgent, including strengthening the quality of online education, enhancing flexibility in university major selection, reinforcing career education, and strengthening the linkage between vocational education and the labor market."

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