Prospects are grim for youth unemployment

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Prospects are grim for youth unemployment


Korea’s youth unemployment rate, which was stuck in the double digits for the second month in a row in March, won’t improve soon as many leading companies are holding back on hiring this year.

In a survey released Thursday by the country’s biggest business lobbying group, the Federation of Korean Industries (FKI), 21 out of 30 major groups, including Samsung, Hyundai Motor and LG, plan to hire the same number or fewer people this year compared to the previous year.

“Sixteen groups plan to reduce the number, while only nine are thinking about hiring more this year,” said Chung Jo-won, an FKI team leader.

Korean companies’ new hires are largely entry-level employees or people in their 20s or early 30s.

The FKI predicted this year’s new hires for large companies will be 126,394, a 4.2 percent decrease year on year. On the other hand, the overall number of employees for 30 major groups in the country will reach 1.18 million, up 1.6 percent from the previous year’s 1.17 million.

“The total number of employees working for these groups continued to rise starting from 2014,” Chung said.

The top 10 groups plan to recruit a total of 79,144 people, down 1.6 percent from the previous year. They will account for 62.6 percent of the total number of employees the 30 major groups will hire this year.

Last year, the top 30 conglomerates planned to recruit 122,051 people but ended up hiring 131,917, 8.1 percent higher than their initial plans. The FKI said this was mainly due to the government’s “200,000-plus youth job creation project” started last year. The FKI said that both companies and the government were able to find new markets to allow more hires.

“The local and global economies are slowing down, and companies now face difficulties paying wages, since the retirement age has also gone up,” said Song Won-keun, a director at the FKI. “However, it appears that these 30 groups are trying their best to hire as many people as possible.

“I really hope that the National Assembly passes bills related to reforms, including restructuring the labor and service sectors as early as possible so that the labor market can grow once again.”

The survey was conducted from Jan. 19 to April 18. The FKI chose 30 groups from a list for the Fair Trade Commission, ranking groups by assets.

Meanwhile, a survey by the Korea Chamber of Commerce & Industry (KCCI) also showed that many companies have concerns about the law raising the retirement age, and that many companies are not adopting the peak wage system, which delays the mandatory retirement age in return for lower wages in the final years of employment.

In fact, only 40 percent of 300 companies with more than 300 employees have adopted the new system. A law passed in 2013 mandates companies with more than 300 employees delay the retirement age from 55 to 60 starting this year.

Of the companies, 42.7 percent said they have adopted the new system, while 23.7 percent said they are making some changes to their wage systems, and 46 percent told the KCCI that they are doing neither.

More than 67 percent of respondents said they are not happy with the new retirement law. Some 53 percent said they don’t like it because they will have to spend more for labor, while 23.7 percent said they have issues in managing manpower. Another 21 percent said their productivity has decreased because of relatively older workers. The respondents were allowed more than one answer.

Due to these concerns, 52 percent of the companies said they have no choice but to cut the number of new hires this year.

“Many worried that the rise in the retirement age might have a negative impact on local companies’ recruitment plans, and the survey shows they were right,” said Kim In-seok, a team leader at the KCCI.

According to data released earlier this month by Statistics Korea, the unemployment rate in March among job seekers aged 15 to 29 was 11.8 percent, 1.1 percentage points higher than a year earlier and a record rate for March historically. The rate rose to 12.5 percent in February.

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