Make opportunities for the young

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Make opportunities for the young

Lee Jong-wha
The author, a former chief economist at the Asian Development Bank, is an economics professor of Korea University.

The Moon Jae-in administration envisions a people-focused economy and promises to invest in people. Yet the lives of the young are not improving. The number of registered unemployed individuals among those in their 20s totals 347,000. The jobless rate is highest among those in the 20-to-30 category. The number will increase after university graduation in February. Many face tougher days after they receive diplomas.

According to a joint survey by the Ministry of Education and the Korea Education Development Institute in February, the employment rate of 574,000 who graduated from universities and graduate schools in February and August 2017 was 66.2 percent, the lowest since 2011. Of the 510,000 jobseekers — after subtracting those with illnesses, in the military or pursuing higher degrees — 338,000 found jobs, either at home or abroad, or began their own businesses. The remaining 172,000 failed to find or create work. The graduates in 2018 would not have been any luckier. Many are still looking for decent jobs or struggling with part-time jobs.

The so-called eco-generation, born from 1991 to 1996, is joining a job market shrinking due to economic slowdown and structural problems. The Moon administration has spent billions of dollars to create jobs, but has been backed against the wall due to low growth and sluggish investment. The number of employed increased by a mere 34,000 in December against the same month in 2017. The manufacturing sector lost 127,000 jobs, while wholesale, retail and lodging sectors lost 102,000 and the services and rental sector lost 89,000.

Although most students enter college, decent jobs for graduates are far lacking. Of those graduating in 2017, only 9.5 percent were recruited by large companies. The rate was 12 percent in the government and public sector. Large companies cannot increase employment amid growing automation and technology advances that lessen the need for human labor. The government has been trying to sustain employment numbers by adding jobs in the public sector, but it won’t be able to do so for long given the limit in the budget. Four-year university graduates still shun smaller companies due to differences in pay and work terms. The starting monthly pay atlarge companies averaged 2.32 million won ($20,493) last year.

More radical policies are needed to create quality jobs in the private sector. First, companies must be encouraged to invest. The high-value medical, tourism, finance, education and business services sectors should be liberalized to converge into new industries that can create additional jobs. Small- and mid-sized companies require more financial attention so they can improve work conditions. While broadening employment opportunities, the job market also needs greater flexibility to lower the barriers for new entries and make it easier for people to build careers and move to better workplaces.

A presidential economic aide came under fire and was replaced after he advised young people not to whine about poor conditions in Korea and seek jobs in other places, like Southeast Asian nations. But it is not easy to find suitable jobs overseas. Of university graduates in 2018, only 2,532 gained employment in foreign countries. If the government thinks offshore markets offer better opportunities, it should work with public institutions to provide necessary information and arrangements for jobs in developed economies, as well as China and Southeast Asia.

In my earlier column, I warned about serious job deficiency facing our young people over the next five years due to critical demographic challenges, and I called for aggressive public policy. For instance, the government can sponsor programs in which student interns can work in innovative small- and mid-sized enterprises at home or overseas to build experience. If it finances the program for two years for 20,000 graduates per year on an annual pay of 25 million won, it would need a budget of 1 trillion won. The government already authorized 24 trillion won in state-subsidized infrastructure projects that can immediately begin construction without preliminary feasibility studies. Some of the projects have questionable business prospects. The budget of 1 trillion won can be better used, such as for 200 million won in seed money for 1,000 young entrepreneurs in their ventures. The next Kakao or Naver could be created.

Investment in people can help individuals improve their living standards and propel economic advancement. When young people who work hard cannot find jobs after higher education, the loss is critical for individuals, as well as the nation. It becomes harder for them to eventually find a job, even when the economy improves, if it takes so long for them to get their first job. Former U.S. President Theodore Roosevelt said, “Far and away, the best prize that life has to offer is the chance to work hard at work worth doing.” The government must work harder to make opportunities for the young to achieve their dreams.

Translation by the Korea JoongAng Daily staff.

JoongAng Ilbo, Feb. 7, Page 31
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