Current Situation of

Youth Employment and

Best Practice Policy in Korea

Chae, Chang Kyun

(Korea Research Institute for Vocational Education & Training)

Topics

1. Current Status of Youth Employment in Korea

3. Case Study: Youth New Start Project

2. Youth Employment Policies in Korea

1. Current Status of Youth Employment in Korea

Low employment rate and High unemployment rate Overall employment rate is stable but youth employment rate has

dropped since mid of 2000s. In 2010, youth unemployment rate was 7.6%, 2.2 times higher

than total unemployment rate.

Total and youth employment and unemployment rate, 2000-2011

Source: Statistics Korea, KOSIS

Total employment rate

Employment rate of ages 15 to 29

Total unemployment rate

Unemployment rate of ages 15 to 29

1. Current Status of Youth Employment in Korea

Long transition period from graduation till employment Youth spends 11 months in getting their 1st job after graduation. Compared to foreign countries, time spent for youth to get their 1st

job is relatively long in Korea. (Time spent for college graduates : KOR 7.7, 11 EUR 5.8, JPN 6.0 months)

Source: Statistics Korea, ｢ A Survey of Economically Active Population-The Youth ｣ , 2002-2011

Time spent for youth to get 1st job (Unit: 1000 persons, %)

SectionTime spent for youth to get 1st job

Average time spent to get 1st jobUnder 3 months 3-6 months 6 months-1 year 1-2 years 2-3 years Over 3

yearsMay 2011 2,073 560 362 412 195 357

11 months  (52.4) (14.1) (9.2) (10.4) (4.9) (9.0)

May 2010 2,165 562 395 430 221 34010 months

  (52.6) (13.7) (9.6) (10.4) (5.4) (8.3)May 2009 2,243 502 397 461 224 368

11 months  (53.5) (12.0) (9.5) (11.0) (5.3) (8.8)

May 2008 2,281 549 429 499 232 39311 months

  (52.1) (12.5) (9.8) (11.4) (5.3) (9.0)May 2006 2,425 520 419 465 239 463

12 months  (53.5) (11.5) (9.2) (10.3) (5.3) (10.2)

May 2004 2,811 568 423 538 235 43611 months

  (56.1) (11.3) (8.4) (10.7) (4.7) (8.7)June 2002 2,666 644 418 552 267 461

11 months  (53.2) (12.9) (8.4) (11.0) (5.3) (9.2)

Job quality is getting worse Downward employment of college graduates began to appear in

late 1990s, and has been worse since 2002.

Downward employment trend by educational level, 1991-2006

Source: Park, G W; Hong, S J (2009)

1. Current Status of Youth Employment in Korea

M i d d l e s c h o o l o r l o w e r g r a d u a t e sH i g h s c h o o l g r a d u a t e sC o l l e g e g r a d -u a t e s

• Over-education in Korea is a quite serious problem, compared to major advanced countries.

– Korea(24%) > UK(18%) > France(15%) – 11 EUR (7%), Japan(14%)– Over-educated labor force in Sweden and Norway is 0%

Ratio of over-educated college graduates by country (Unit: %)

CHEERS survey data: (F2) How would you characterize the relationship between your field of study and your area of work? 2006 GOMS: (Q13) How do you regard your current job in comparison with your education level?Source: Chae, C K et al. (2009)

1. Current Status of Youth Employment in Korea

  IT ES FR AT DE NL UK FI SE NO CZ EUR JP KO Average

Matching education level

with job92 95 85 89 92 97 82 98 100 100 96 93 86 76 91

Mismatching education level

with job8 5 15 11 8 3 18 2 0 0 4 7 14 24 9

Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Employment in a professional occupation is declining.• Number of college or higher graduates working in professional occupa-

tion was decreased by 9%p over the past 13 years

Changes in youth employment rate by occupation, 1996-2009: college graduates +

(Unit: %, %p)

Source: Statistics Korea, source material of ｢ A Survey of the Economically Active Population ｣

Section 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Increase/Decrease

Manager and professional,

Technicianand sub-

professional

51.5 51.4 52.0 58.8 46.9 46.2 45.7 45.8 43.7 42.5 44.0 44.3 42.6 42.3 -9.2

Clerical worker 30.5 31.3 29.6 29.7 32.5 33.0 33.2 33.3 34.0 35.0 34.2 34.2 35.1 33.8 3.4

Service and sales worker

8.7 8.9 10.7 7.5 12.0 12.1 12.0 11.9 12.0 12.1 11.2 11.3 12.3 13.6 5.0

Production worker 6.8 6.1 5.4 2.4 6.5 6.6 6.8 7.1 8.0 8.3 8.5 8.0 7.8 7.5 0.7

Agricultural, forestry and

fishery worker0.6 0.5 0.6 0.5 0.5 0.5 0.4 0.3 0.3 0.3 0.2 0.3 0.2 0.3 -0.3

Unskilled worker 2.0 1.9 1.8 1.2 1.5 1.6 1.8 1.6 1.9 1.9 1.9 1.9 1.9 2.4 0.4

1. Current Status of Youth Employment in Korea

Regular employment was decreased• 9%p dropped , 76.1% (2002) → 67.1% (2008)

Size and percentage of young employees by employment type

(Unit: 1000 persons, %)

Source: Hwang, S J (2008)

1. Current Status of Youth Employment in Korea

Section 2002 2003 2004 2005 2006 2007 2008

Size

Regular 3,242 2,797 2,654 2,605 2,606 2,590 2,519

Non-regular 1,020 1,301 1,426 1,406 1,285 1,302 1,237

Total 4,262 4,098 4,080 4,011 3,891 3,892 3,756

Increase/Decrease

Regular - -445 -143 -49 1 -16 -71

Non-regular - 281 125 -20 -121 17 -65

Total - -164 -18 -69 -120 1 -136

Percentage

Regular 76.1 68.3 65.0 65.0 67.0 66.6 67.1

Non-regular 23.9 31.7 35.0 35.1 33.0 33.5 32.9

Total 100 100 100 100 100 100 100

Relative wage of youth employees was decreased• National Average Wage = 100, Youth Employees Wage 86.0(1997) →

77.4(2009)

Relative wage level of youth employees, 1997-2009 (Unit: won, %)

Note: Relative wage shows the relative wage level of each age group when the monthly average wage of all age groups is 100 every year. Source: Ministry of Employment and Labor, ｢ A Basic Statistical Survey of Wage Structure 」 .

1. Current Status of Youth Employment in Korea

Year All ages Age 15-19Relative

wage Age 20-24Relative

wage Age 25-29Relative

wage

1997 1,131,621 648,667 57.3 759,950 67.2 973,306 86.0

1998 1,148,122 636,390 55.4 738,316 64.3 950,874 82.8

1999 1,210,838 645,823 53.3 772,854 63.8 996,246 82.3

2000 1,313,910 714,764 54.4 832,520 63.4 1,076,914 82.0

2001 1,393,059 791,760 56.8 877,445 63.0 1,129,796 81.1

2002 1,532,750 874,488 57.1 978,317 63.8 1,263,305 82.4

2003 1,651,100 902,720 54.7 1,046,881 63.4 1,345,451 81.5

2004 1,750,421 973,050 55.6 1,111,586 63.5 1,414,218 80.8

2005 1,887,507 1,059,176 56.1 1,199,724 63.6 1,531,541 81.1

2006 2,014,265 1,166,728 57.9 1,285,094 63.8 1,590,486 79.0

2007 2,127,430 1,197,407 56.3 1,324,322 62.2 1,631,600 76.7

2008 2,258,684 1,166,011 51.6 1,377,757 61.0 1,740,971 77.1

2009 2,270,303 1,105,660 48.7 1,381,373 60.8 1,756,874 77.4

Frequent job turnover High job turnover rate of youth employees

• Job turnover rate of youth is 2.5 times higher than core workforce aged 30-54.

• High unemployment rate of youth employees is caused by frequent job changes as well as difficulty in getting jobs.

Source: KLIPS of each year, re-quoted from Nam, J R (2008). 

Job turnover rates by age group (Unit: %)

1. Current Status of Youth Employment in Korea

Age 1998-1999 2001-2002 2003-2004 2005-2006 Average

15-29 6.6 5.3 7.2 6.1 6.0

30-54 3.3 1.7 2.4 2.7 2.5

55 and over 5.1 1.6 2.4 2.0 2.7

15-29/30-54 2.0 3.1 3.0 2.3 2.5

55 and over/30-54 1.6 0.9 1.0 0.8 1.1

Job mismatch is getting worse While youth unemployment rate is high, SMEs have faced man-

power shortage .• The Beveridge Curve’s distance from origin is getting far gradually

since 2003.• Caused by expansion of higher educated youth, their higher standard

in job choice, and the poor working conditions of SMEs.The Beveridge Curve in Korea, 1994-2008

Source: Statistics Korea, KOSIS, Ministry of Employment and Labor, Labor Statistics (http://laborstat.molab.go.kr/).

1. Current Status of Youth Employment in Korea

Vacan

cy

rate

Unemployment rate

1. Current Status of Youth Employment in Korea

Background of youth employment problems in Korea Oversupply of post-secondary educated

• College enrollment rates have increased significantly from 33.2% in 1990 to 78.9% in 2010

College enrollment rates and total number of college graduates

College graduates (1000 persons)

College enrollment rate (%)

 

Reservation wage of youth is getting high• Due to higher education, young job seekers have higher standard of

job choice → Their actual wage was only 60-70% of reservation wage in 2007.

(Unit: 10,000 won, %)

Gap between reservation wage and actual wage

1. Current Status of Youth Employment in Korea

Source: Korea Employment Information Service

SectionReservation wage

(annual income)

Actual wage

(annual income)

Actual wage/Reservatio

n wage

Polytech graduates

2002 1,459 1,196 81.9

2007 2,623 1,617 61.6

College graduates

2002 2,004 1,726 86.1

2007 2,949 2,199 74.6

Decreased job opportunity preferred by youth• Jobs in large enterprises, public sectors and financial businesses

have decreased by 651,000, from 4,093,000 in 1995 to 3,442,000 in 2006

(Unit: 10,000 persons)

Fluctuation in number of job preferred by youth

1. Current Status of Youth Employment in Korea

Source: Park, G W; Hong, S J (2009)

Year Large enterprises Public officialsFinancial

businessesTotal

Change compared with 1995

1995 251.1 87.1 71.1 409.3 -

1998 204.1 84.4 66.3 354.8 -54.5

2000 163.7 83.7 61.4 308.8 -100.5

2002 178.4 86.9 63.3 328.6 -80.7

2004 187.0 91.9 58.3 337.2 -72.1

2006 191.7 90.5 62.0 344.2 -65.1

Changes of Labor market structure since Asian Financial Crisis in 1998

→ The most damaged group is youth. → New or revised policies for youth employment have been

planned and implemented every year, since the crisis. → Although various policies have been implemented, youth em-

ployment problems have kept continuously and sometimes got worse.

Comprehensive policies = short-term + long-term policies

However, strict policy evaluations have not been done yet.

2. Youth Employment Policies in Korea

Major policies : Creating jobs for youth

• Fostering social enterprises run by youth

• Creating jobs in public sectors

• Expanding opportunities for SMEs to recruit interns

• Supporting youth to initiate and start a business

• Supporting overseas employment

• Job sharing among generations

2. Youth Employment Policies in Korea

Major policies : Strengthen the linkage between schools and workplaces

• Public release of graduates employment rate by college

• Government support for “Employment Academy “ : Training college graduates in line with industry demand and re-

quirement

• Promote hiring “Special (vocational) High School “graduates

2. Youth Employment Policies in Korea

Major policies : reduce Job mismatches

• Enhance career guidance in school : Increase the number of career counselors in school

• Encourage youth to get jobs in SMEs

• Build up a comprehensive job information network (e.g. : “Job Young” )

2. Youth Employment Policies in Korea

3. Case Study: Youth New Start Project

Project overview

Providing a personalized and comprehensive employment support service from career guidance to job placement

Participants : This service is for the unemployed who did not go to college, long-term jobless, youth at risk (those who dropped out of school etc.), NEET

Composed of three phases

Depending on the characteristics of participant, some partici-pants should pass through three phases, or can participate in only one phase, or in phase 1 and 2, or phase 1 and 3.

Support programs by phase

3. Case Study: Youth New Start Project

Diagnosis / Path Setting (3 – 6 weeks)

* Individual interview* Vocational psychological testing* Career guidance program* IAP (Individual Action Plan) set-up* Mutual obligation con-tract

Improving Willingnessand Competency

(2 – 6 months)

* Vocational training* Training Voucher* Workplace experience (include. NPO)* SMEs youth internship

IntensiveJob Placement

(3 months)

Intensive job Placement /

Accompanyingapplicant

to Job interview

Employment sup-port

AllowanceEmployment promo-

tion subsidy for young

workers

Employ-ment

/ Start-up

Results of the Youth New Start Project, 2008-10

3. Case Study: Youth New Start Project

Year Budget Number of participants

2008 1,000 3,263

2009 16,850 16,660

2010 9,185 12,549

(Unit: million won, person)

3. Case Study: Youth New Start Project

Major factors of good performance

Customized services to clients

Individual consulting services

Satisfaction in individual consulting at phase 1, 2009

Number of individual con-sulting offered to each

participant

Time for each consulting (minute)

Satisfaction rate with the quality and procedures of individual consulting (%)

Satisfaction rate with in-dividual consulting, as to career path decision (%)

5.1 45 minutes 78.5 73.3

Package program : The project includes almost all active labor market policies

Participation rates by phase, 2010

3. Case Study: Youth New Start Project

Phase 1 Phase 1→2 Phase 1→3 Phase 1→2→3

17.4 24.7 36.8 21.1

Participation rates in phase 2 programs, 2009

(Unit: %)

Youth workplace

experience programTraining voucher

SMEs youth intern-ship

Steppingstone Work

Other

(Business start-up school/other pro-

grams)

28.9 48.4 9.0 11.5 5.9

(Unit: %)

Targeting vulnerable groups

Education level and type of participants, 2010

3. Case Study: Youth New Start Project

(Unit: %)

Item %

By educa-tional level

High school graduate or less 39.9

Polytech graduate/in school 21.6

College graduate/in school 38.5

By type

High school graduate or those with below upper secondary who does not go on to further schooling

33.6

Long-term jobless 55.4

At-risk youth 10.1

NEET 0.4

Others 0.5

Source: Recompiled from Ryu, J S et al. (2010)

Private agencies took complete responsibility for offering ser-vices to 40% of participants

3. Case Study : Youth New Start Project

Outcomes

Performance of Youth New Start Project, 2009

  Group completed course Group not completed course

Employment rate (%) 39.0 14.5

Average time spent to get a job (day)

141.8 187.3

Wage change before/after project participation (10,000 won)

+103,000 won

(from 1,192,000 won to 1,295,000 won, average monthly wage)

-14,000 won

(from 1,129,000 won to 1,115,000 won, average monthly wage)

Before / After the Youth New Start Project

3. Case Study: Youth New Start Project

Item Before participation After participation

Job position

(%)

Permanent job 52.0 61.3

Temporary job 29.1 27.1

Daily job 13.9 6.7

Others 4.9 5.0

Working hours per week

(%)

Under 30 hours 29.4 22.9

30 hours - under 50 hours 44.2 52.9

Over 50 hours 26.5 24.3

Work days per week

(%)

Under 5 days 4.7 2.1

5 days 44.4 64.3

Over 6 days 50.7 33.5

Average monthly income

(%)

Under 1 million won 24.4 17.2

1 - 1.5 million won 46.4 46.8

1.5 - 2 million won 20.6 29.3

Over 2 million won 8.6 6.8

Matching Level

(on a 5-point scale)

Matching job-educational level 3.04 3.22

Matching job-skills 3.12 3.29

Job satisfactionOverall job (workplace)

satisfaction2.78 3.21

3. Case Study: Youth New Start Project

Suggestion for Improvement

Course completion rates for some vulnerable groups were low. → More incentives can encourage participants to complete their

course.

Employment rate oriented evaluation system may cause Creaming & parking problem

→ More sophisticated evaluation method should be developed (e.g. Job quality index can be used as one of criteria).

The effectiveness of the program depends on the effectiveness of active labor market policies and their infrastructure.

Effective, but expensive → cost-efficiency should be increased

THANK YOU

Q & AQ & A