Why the young always need jobs

Kim Kyung-rok
The author is an adviser at Mirae Asset Management.

Japan’s job market entered a lengthy slump from the mid-1990s after an asset bubble burst. A book on a workless society was published in 2014. Ironically, the job market for young Japanese turned around following the release of the book. Those who became “freeters,” a Japanese expression for free-lancers or people lacking full-time employment, became “parasite singles” in their 40s and 50s, living off their parents’ pensions.

Freeters numbered 2.2 million by 2003. The count shrank to 1.4 million in 2019 thanks to an easing of the job crisis. But they are aging. The share of people aged between 35 and 54, which accounted for only 25 percent of total freeters, shot up to 72 percent in 2019. Demographic factors are behind the phenomenon.

People in their 20s in Japan, who numbered 19 million in the mid-1990s, shriveled to 12.6 million in 2019. The thinning of the young population provided a breakthrough in the job market. But those who could not land a job at an earlier age and build careers have to stay unemployed or settle for irregular work. Since wages do not increase by seniority for free-lancers, freeters must dig into the savings or pensions of their parents. The so-called “slide society” is where unemployment at a young age leads to a life of permanent insecurity. Many will have to rely on state handouts.

If society had increased employment for the young despite the costs, they would have turned into valuable human resources amid a thinning population. The burden on the parents and social security would have eased. Japan’s trajectory poses a lesson that aggressive employment is an effective strategy when the young population is expected to shrink. Jobs in the present can ensure jobs in the future. The cost should not be considered an expenditure, but an investment.

South Korea has been experiencing rapid changes in its youth population. Since career building starts later in South Korea due to conscription for men, the number of people aged 25 to 34 could be a reference. That age group peaked at 8.6 million in 2000 and sank to 7 million in 2020. After 20 years, it will shrink to 4.5 million, or down 35 percent from now. The impact from a thinning youth population has already been notable. Universities cannot fulfill quotas and companies that don’t pay well cannot find job applicants. In due time, good jobs may not be able to find adequate people.

The problem won’t go away because it’s part of our demographics. A fish on land needs water immediately. It could die on the way to a river or sea. The young who cannot find jobs after graduating won’t be able to get one when they get older. The adverse effects are huge. When one derails from a regular career path, one can fall into a nonstop slide. Despite the immediate costs, society must offer greater opportunities for the young to work.

Environmental, social and corporate governance (ESG) has become important to modern corporations, making they think about more than short-term profits. Any kind of social commitment should include people. When work is not stable, society too cannot be stable. Human capital is first enhanced through schooling and deepens through work.

Without quality jobs, quality human capital cannot accumulate. If this mismatch in educated human resources and jobs is left unattended to during the demographical transitional period, the valuable human resources invested in by families and the state could be wasted. The government and corporate sector must do their parts to preemptively smoothen the gap in the future. An inter-temporal approach that takes demography into account is necessary.

Translation by the Korea JoongAng Daily staff.