Finding a breakthrough in the service industry

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Finding a breakthrough in the service industry

Young people who are struggling to find a job eventually give up on dating, marriage, having kids, making friends and buying a home. Therefore, resolving youth unemployment is very crucial. However, in the age of “growth without employment,” quality jobs are not created automatically, and young people cannot push the older generation to give their jobs to the youth.

Instead of a zero-sum game over limited jobs, the high-value-added service industry should be aggressively expanded to provide opportunities that young people prefer.

We don’t need to look further to understand why the service industry is so important. It is the industry where young people like to work. Young people value pride and individuality and would like to do what they want. According to a survey in 2013, people in their 20s and 30s value “subjective satisfaction” (36.2 percent) over monetary compensation (27 percent) or social status and power (13.7 percent) as the standards of success in their lives.

The service industry has great impact on boosting employment. When GDP grows by 1 billion won ($854,000), the manufacturing industry creates new jobs for 9.3 people, but the service industry can employ 16.6 more people. With the latest demographic and social structural changes, such as a low birth rate, aging society, retirement of baby boomers, increased female participation and the increase of one-person households, the service sector is about to expand in the Korean economy. The need to create more jobs for young people by focusing on the high-value-added service industry is desperate.

However, society is moving too slowly. Legislation expected to create jobs for the youth are pending in the National Assembly. The Service Industry Development Act was initiated more than two years ago.

Companies should also drastically expand investment in the service industry. Last year, more than 14 million foreign tourists visited Korea, and 250,000 foreign patients were treated in Korea. Hopefully, more investments will be made in tourism, health and beauty and medical services.

In order to encourage companies to make investments, government efforts to ease regulations on the service industry should continue. According to the Korea Economic Research Institute, the effect of job creation by conglomerates in the service industry would increase 2.6 times “if no entry regulations are applied.” The government needs to check if there are any unnecessary entry regulations and remove or ease them. The solution to job creation for young people is to nurture the high-value-added service industry that young people prefer. The answer is already given. Now, the National Assembly, companies and government need to work together.

by Shin Yong-han, Chairman of the Presidential Committee on Young Generation

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