20/12/2007 - Labour market outcomes for young people in Korea deteriorated in the aftermath of the financial crisis of the late 1990s. Though the government has introduced a wide range of measures since the early 2000s, much remains to be done to restore the dynamism of the youth labour market, according to a new OECD report.
The report, Jobs for Youth: Korea, notes that the youth unemployment rate is still below the OECD average of 14.7%. But from 6-8% before the financial crisis it has risen to exceed 10% since 2003. The employment rate of young people remains relatively low, at 27% in 2006, compared with the OECD average of 43% (see table). The low employment rate is partly due to Korea's relatively high level of participation in tertiary education.
The proportion of young people who are neither in employment nor in education or training (NEET) is close to the OECD average for the age group 15-24, but for the age group 15-29 this NEET rate is 17%, considerably above the OECD average. The high NEET rate among older youth reflects both late entry to the labour market due to mandatory military service and nearly-universal participation in tertiary education and high non-employment among tertiary graduates.
At the same time, many young workers are often trapped in so called "non regular" jobs, i.e. jobs of short duration which offer limited career prospects. Over 33% of workers aged 15-29 had a non-regular contract in 2006. Furthermore, a growing number of young graduates do not find jobs corresponding to the skills they have acquired in education (an issue of so called "over education").
These problems reflect several factors. First, the rapid expansion of tertiary education has led to increasing mismatches between the skills provided by the education system and the requirements of the labour market. Second, there are demand-side obstacles to youth employment. Employment regulations (e.g. the gap in employment protection between regular and non-regular workers) may have aggravated labour market duality, thereby making it difficult for workers employed on non-regular contracts, youth in particular, to move to regular employment. Third, non employed youth (particularly those with lower educational attainment) do not receive adequate support when seeking a job, despite recent efforts by the government to change the situation.
Overall, the education system and labour market regulatory framework, which served Korea very well for several decades, need to be further modernised in view of the rapidly changing requirements of today's more complex, globalising Korean economy.
To tackle these issues, the OECD report makes a number of recommendations:
Strengthen the links between university and the world of work. While universities and colleges have launched various initiatives to improve their connections with labour markets, more systematic efforts to enhance these linkages are needed. One option would be to encourage universities and colleges to expand internships and other types of work-experience spells and to include them in the curriculum. Another approach is to make part of government funding of universities and colleges conditional on the labour market outcomes of their graduates. For the latter option to work, it would have to be complemented by an institutional set-up which permits effective monitoring of students' labour market outcomes.
Provide career guidance services to all students to ensure that their decisions on courses of study are based on informed and guided choices. Given virtually universal participation in tertiary education in Korea and the associated mismatch problems in the labour market, it is extremely important to provide good-quality career information and guidance to secondary students. Promisingly, the government announced in 2006 a five year plan to promote lifelong career development, which includes measures to provide students at all levels with work experience opportunities and career-related information. It is essential to implement this plan in a systematic way.
Pursue more comprehensive reform of employment protection legislation. To address increasing labour market dualism and to enhance job prospects for young people, it is necessary to reduce the gap in employment protection between regular and non-regular workers while at the same time reinforcing overall workers' security in the labour market. In this regard, the recent labour law reform is a promising first step. However, more reforms are needed in such areas as the time-consuming dismissal settlement system and collective dismissal procedures. In the longer term, Korea should consider developing an appropriate form of "flexicurity", i.e. a model that combines flexible contractual arrangements with an adequate level of income security and effective active labour market policies.
Give more priority in youth labour market policies to the NEET group of young people and streamline existing programmes for youth. The design of youth employment policies will need to change in order to cover all youth who are neither in education nor in employment, not only the unemployed, and to give greater attention to the problems of less-educated youth. Meanwhile, there are many small programmes for youth run by various government authorities. This makes it more difficult for young people to orient themselves among the multiple options, and increases the difficulties of programme monitoring and evaluation. Streamlining of these programmes following a wide-ranging evaluation of their organisation and impacts would be a cost effective approach.
Continue efforts to strengthen the public employment service and make it more pertinent to the needs of young job-seekers. Notwithstanding the government's recent investments in the public employment service (PES), so far only a limited number of youth are using PES services. The PES should boost its market share, facilitate young people's access to its services and extend its career guidance and job assistance services to all youth in need.
The report, entitled Jobs for Youth: Korea (Des emplois pour les jeunes: Corée), is the latest in a series launched by the OECD in some sixteen countries. This publication is available to journalists from the OECD's Media Division (tel. + 33 1 45 24 97 00). The report can be purchased in paper or electronic form through the OECD's Online Bookshop. Subscribers and readers at subscribing institutions can access the online version via SourceOECD.
For further comment, journalists are invited to contact Chang-Hun Han in the OECD's Employment, Labour and Social Affairs Directorate (tel. +33 1 45 24 92 79).