Korea Employers Federation: "Labor Market Flexibility and Regulatory Innovation Needed to Revitalize Youth Employment"

Report on Measures for Youth Job Creation Announced

[Asia Economy Reporter Kiho Sung] The Korea Employers Federation (KEF) pointed out that the sluggish youth employment is due to "a rigid labor market structure, labor market mismatch (discrepancies in labor supply and demand caused by higher education levels and wage gaps, and university education not keeping pace with industrial demand), and the declining employment creation capacity of our economy."

KEF stated this in a report titled "Youth Job Creation Measures: Hope for Youth on the Brink" released on the 16th.

Regarding the rigid labor market structure, KEF said, "The rigid labor market structure and seniority-based wage system act as entry barriers for young people trying to enter the labor market," adding, "Due to rigid employment regulations and excessive demands from strong labor unions, large corporations and regular workers enjoy high wages and job stability, while young people face difficulties entering the labor market."

On the labor supply-demand mismatch caused by higher education levels and wage gaps, KEF explained, "The phenomenon of highly educated youth flocking to large corporations and public enterprises has intensified due to excessively high starting salaries for university graduates at large companies, while small and medium-sized enterprises suffer from chronic labor shortages, deepening the supply-demand mismatch." It also noted, "The starting salary for university graduates at large domestic workplaces is about twice that of small and medium-sized workplaces and approximately 60% higher than that of large companies in Japan."

Regarding "university education not keeping pace with industrial demand," KEF emphasized the need for improvement, stating that due to changes in the economic environment and university education being disconnected from industrial demand, young people possess relatively weak job skills compared to their educational level. In particular, "Although demand for cutting-edge industries such as AI and big data is rapidly increasing, our universities have not even increased the enrollment quotas for related departments and are unable to keep up with the pace of change," adding, "The mismatch between majors and occupations in Korea reaches 50%, higher than major competing countries such as Germany, the United States, and Japan. This is attributed to the 'education bubble' caused by the rapid quantitative expansion of universities without sufficiently improving the qualitative level of university education."

KEF also pointed out regarding "the declining employment creation capacity of our economy," that "In a situation where the low-growth trend is becoming entrenched, excessive regulations beyond global standards and unpredictable regulations are newly established or strengthened, leading to an overall decline in the employment creation capacity of our economy and worsening youth employment."

Youngtae Lim, head of KEF's Employment Policy Team, said, "To create youth jobs, improvements in laws and systems, labor market structural reforms, and social awareness improvements are urgent," emphasizing, "First, it is necessary to ease labor market rigidity to support easy labor market entry for young people, recover employment creation capacity through regulatory innovation, and improve laws and systems to support youth entrepreneurship and job creation."

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