KEF: "Youth Employment Declines, More Highly Educated Resting Youth... Caution Needed on Retirement Age Extension"

Sharp Increase in "Resting" Youth Among Recent Generations
Declining Share of Young Workers With Less Than One Year of Service
Widening Wage Gap and Mandatory Retirement Age of 60 Identified as Key Causes

An analysis has indicated that the youth employment rate is declining and the number of "resting" youth is increasing, due to negative impacts on youth employment such as weakened job creation capacity stemming from low growth and the mandatory retirement age.

KEF "Improvement Tasks for Youth Job Creation" Report. KEF

The Korea Employers Federation (KEF) released this information on April 20 in its report titled "Improvement Tasks for Creating Youth Jobs."

According to the report, the youth employment rate has declined for 23 consecutive months from May 2024 to March this year. During this period, the number of "resting" youth—those not participating in job-seeking activities—has increased for three consecutive years, particularly among highly educated individuals. Since 2023, the population of resting youth has shifted to an upward trend, continuing to rise for three straight years.

Compared to previous generations, the number of resting youth has increased sharply among more recent birth cohorts. For example, in 2004, when those born between 1975 and 1979 were aged 25 to 29, the number of resting youth was 84,000. In contrast, in 2024, when those born between 1995 and 1999 reached the same age group, the number soared to 217,000.

The proportion of young people (aged 15 to 29) among employees with less than one year of service—an indicator of new hires—fell from 33.6% in 2006 to 25.2% in 2025, a decrease of 8.4 percentage points over 20 years. Additionally, the period from graduation to first employment among young people has increased by 1.2 months in the past four years, from 10.1 months in 2021 to 11.3 months in 2025.

The report identified several causes for sluggish youth employment, including a mismatch between labor supply and demand, as well as negative effects from the mandatory retirement age of 60. As wage gaps have widened according to company size and employment type, the tendency for highly educated young people to concentrate in large conglomerates has intensified. Meanwhile, small and medium-sized enterprises have experienced a deepening structural mismatch between persistent labor shortages and demand.

KCCI "Improvement Tasks for Youth Job Creation" Report. KCCI

As of last year, the hourly wage for regular employees at large companies was 20,125 won, which is 43% higher than the 14,066 won per hour earned by young people working at small and medium-sized enterprises or in non-regular positions. In the past decade, six out of ten young people have expressed a preference for working at large companies, public enterprises, or government posts.

Numerous studies have found that the mandatory retirement age of 60 has reduced youth employment. In particular, since the retirement age was legislated in 2013, there has been a clear increase in the employment of older workers among regular employees at large companies, but the increase in youth employment has been relatively lackluster.

Choi Moonseok, Head of the Youth ESG Team at KEF, emphasized, "The youth employment rate has declined for 23 consecutive months, and last year the number of resting youth in their 20s and 30s exceeded 700,000, indicating that the youth employment crisis is ongoing. Extraordinary measures are needed to draw resting youth into the labor market and offer job opportunities to young people who wish to work."

He added, "To create jobs for young people, we must enhance employment flexibility to invigorate the labor market and address job mismatches, while focusing policy efforts on strengthening employment support services for unemployed youth, including programs such as the Future Tomorrow Work Experience project. In the current youth employment crisis, it is necessary to exercise caution in discussions about extending the statutory retirement age, as such changes could negatively affect new hiring."

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