Gov’t takes on youth joblessness

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Gov’t takes on youth joblessness

The government pledged to create at least 200,000 jobs for unemployed youth by 2017, not only at state-run organizations but also in the private sector.

The pledge came days after Korea saw its number of jobless people in their 20s reach 410,000 in the first half of the year, the highest number since the country started collecting data in its current form.

Six ministers of economic affairs-related organizations announced a package of polices to prevent an “employment cliff for young people,” referring to a projected climb in the youth unemployment rate around 2018.

With the extension of the legal retirement age to 60 starting next year, the government predicts that young people will have trouble finding entry-level jobs in the next three or four years.


Finance Minister Choi Kyung-hwan, left, and Federation of Korean Industries Chairman Huh Chang-soo hold a meeting discussing youth unemployment at the Korea Chamber of Commerce and Industry’s headquarters in downtown Seoul on Monday. [NEWSIS]

The children of Korea’s baby boomer generation, born after the 1950-53 Korean War, are expected to enter the job market en masse in the coming years.

“The number of people in their 20s and the university graduate population is increasing,” said Finance Minister Choi Kyung-hwan at a press conference with five other ministers on Monday. “When the retirement age is raised next year, it will become more difficult for them to find a new job.”

More than 40,000 new jobs for young people will be created in the public sector, including education, public health and childcare, Choi said.

In public education, the government will urge senior teachers at state-run elementary, middle and high schools to retire earlier than their legal retirement age of 62 so that more young people could be employed.

“Last year, the number of teachers who volunteered to retire earlier than their retirement age surged to more than 13,000 due to their fears of changes in the pension system,” an official from the Ministry of Strategy and Finance said by phone. “Many wanted to retire earlier to receive pensions under the current system.”

If teachers accept early retirement under the current pension system, they can receive a lump sum payment of 100 million won ($85,600) separate from their pensions, according to the ministry.

“But due to a budget shortage at local education offices, we couldn’t accept applications for early retirement last year,” the official said. “So starting this year, with the tax increases by local governments, we will accept more teachers retiring early.”

Asked if urging teachers to retire early is contrary to the government’s push for extending the retirement age to 60 in both the public and private sectors, he said, “The job market at schools is a different matter. We just accept people hoping for early retirement, we’re not pushing teachers to quit their jobs.”

In the private sector, companies will be given government subsidies if they hire one young employee as an entry-level worker, about 10 million won for small- and medium-size enterprises (SMEs) and 5 million won for conglomerates per worker.

To receive the subsidies, the companies must adopt the so-called “peak salary system,” that gradually cuts wages of employees in the years leading up to their retirement.

The subsidies are expected to create about 6,000 jobs for young people, the government said. About 12.3 billion won of the budget will be spent on the policy. They will be offered for the next three years.

The legal age defining “youth” will also be extended from the current 15 to 29 range to between 15 and 34 so that the government’s support will be extended to those who fail to find a job in their early 30s.

Specialized career training programs will also be introduced. Graduates from universities will be able to participate in training programs for special skills needed at conglomerates. If they complete a six-month course, they can get a job at an SME in partnership with the conglomerates.

The program is expected to create at least 55,000 jobs in total over the next two years, if the top 30 conglomerates participate.

About 4,900 new part-time jobs and 12,716 jobs for teachers at day care centers will also be added.

Ten thousand more nurse positions will also be opened up between 2015 and 2017, according to the ministry.

However, businessmen said the measures would not encourage private companies to increase employment.

“No matter how much the government offers in tax benefits or subsidies, we can’t hire 200 people for work that 100 people can finish,” said a manager of a local company.

An HR manager at a retail company said, “Just demanding companies hire people won’t do much. The government should push forward fundamental reforms in the labor market.”

Some managers of SMEs complained that the measures weren’t likely to help.

“The reason the SMEs don’t hire more people is not because we don’t have money,” said the head of one small company. “It’s because young people don’t apply to us. That’s the problem that the government should resolve.”

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