[The Editors' Verdict] The Nation Thrives When Its Youth Thrive

[Asia Economy] As the novel coronavirus infection (COVID-19) begins to spread again, the faint hope for economic recovery within the year is fading away. Enormous funds have been poured out, including the formation of a third supplementary budget, to prevent corporate bankruptcies and closures of self-employed businesses and to maintain jobs. The government showed great encouragement when the Organisation for Economic Co-operation and Development (OECD) recently raised South Korea’s economic growth forecast to -0.8%, the highest among all 37 member countries, in its '2020 Korea Economic Report.' However, anxiety is growing as the second wave of COVID-19 begins. The government believed that since the pandemic was an unforeseen global crisis, the solution was to endure by pumping unlimited funds despite the deterioration of fiscal soundness. Thanks to this, many problems were covered up. But although not visible on the surface, they are festering inside. Various difficult issues, including real estate, are worsening day by day rather than being resolved.

The most unfortunate thing is that the younger generation is losing hope. The current youth, called the 'COVID-19 generation,' will soon become the backbone of the Republic of Korea. However, a significant number of them are turning into repeat job seekers without even having the opportunity to work properly. According to the July 2020 employment trends released by Statistics Korea, the expanded unemployment rate for domestic youth (ages 15-29) was 25.6%, the highest for any July since related statistics began in January 2015. The expanded unemployment rate (Employment Supplementary Indicator 3) includes those working 36 hours or less per week who want additional employment ('time-related additional job seekers') and the 'potential economically active population' who want to work regardless of job search activity, thus reducing the gap between the official unemployment rate and the perceived unemployment rate. This indicates the actual 'perceived unemployment rate' felt by young people. In June, when youth unemployment was highest, the official youth unemployment rate was 10.7%, but the perceived unemployment rate was 26.8%. In other words, one in four young people considers themselves unemployed. The problem is that the perceived unemployment rate among youth has been rapidly increasing since 2017, when it was 21.7%.

With the spread of non-face-to-face (untact) culture due to COVID-19, hiring and work methods are rapidly changing. Hyundai and Kia Motors have abolished regular recruitment, and large companies like KT and LG have announced the elimination of new graduate recruitment. The trend is shifting from large-scale public recruitment to small-scale continuous hiring, and as COVID-19 prolongs, the number of recruitments itself is decreasing. The proportion of experienced hires in large corporations, public enterprises, and financial institutions preferred by job seekers has long exceeded 80%. As the Fourth Industrial Revolution progresses, the replacement of human labor by artificial intelligence (AI) and robots will intensify.

Meanwhile, the government announced that it will create 550,000 digital jobs, internships, and public jobs through the Korean New Deal by 2022. However, the jobs the government plans to create tend to be short-term six-month part-time jobs and are likely to remain mere slogans. The 550,000 jobs proposed by the government are simply calculated by multiplying the fiscal input by the employment inducement coefficient by industry. If companies do not take out loans, the employment creation effect disappears, so it is difficult to assign significant meaning to the number itself.

The government has proposed various policies such as the 'Youth Tomorrow Filling Deduction,' 'Youth Job-Seeking Activity Support Fund,' and 'Employment Success Package.' Including local government youth policies, there are more than 1,700 policies. The problem lies in their almost complete lack of effectiveness. Youth policies that young people neither know about nor feel have no meaning. Policies that turn most job seekers into exam preparation groups have no future. Answers must be found in the private sector.

Kang Insu, Professor, Department of Economics, Sookmyung Women’s University

This content was produced with the assistance of AI translation services.