Fix labor market duality to save youth employment
Published: 06 Feb. 2025, 00:00
A growing preference among companies for hiring experienced workers is reducing job opportunities for those without prior employment experience. According to a recent Bank of Korea (BOK) report titled “The rise in experienced hiring and its impact on youth employment” released earlier this week, between 2017 and 2021, the probability of a non-experienced individual securing employment was only half that of an experienced worker. This trend disproportionately affects young people in their twenties, who are just entering the job market with limited experience, further lowering their employment rate.
Many young job seekers, disheartened by repeated failures, may ultimately give up on employment efforts altogether, becoming part of the so-called NEET (Not in Education, Employment, or Training) group. According to the 2024 supplementary youth employment survey conducted as part of the Economically Active Population Survey, 24.7 percent of unemployed youth who had already graduated reported that they were not engaged in any productive activities. Young people withdrawing from the work force at the prime of their working lives is not only a personal misfortune but also a massive waste of national human capital.
However, simply advising young people to lower their expectations and start with nonregular or small-business jobs is not a viable solution. The rigid dual labor market structure, which clearly separates the primary job market — large corporations, public enterprises and regular employment — from the secondary job market — small businesses and nonregular employment — prevents mobility between the two segments. Once individuals enter the nonregular or small-business sector, climbing the ladder to higher-quality employment is extremely difficult. According to the BOK report, only 10.1 percent of nonregular workers transitioned to regular employment after one year, a significantly lower rate than in other advanced economies.
The fundamental solution to the youth employment crisis lies in comprehensive labor reform. Yoon Hee-sook, a renowned economist and head of the Yeouido Institute, a think tank affiliated with the People Power Party (PPP), addresses this issue in her latest book published this year, “Cold Case.” She cites the example of Jang Geu-rae, the contract worker from the hit drama “Misaeng” (2014), arguing that strictly limiting the use of nonregular employment to two years is counterproductive. Instead of imposing rigid employment restrictions, policymakers should focus on eliminating discrimination and improving working conditions for nonregular employees.
She makes a compelling argument: “If the government had outright banned the use of nonregular workers, Jang Geu-rae would never have gained on-the-job training, built valuable professional networks with his supervisors or had the chance to start his own business.” The key, she argues, is not to eliminate nonregular employment but to ensure a clear pathway for career progression.
The problem of labor market duality has been widely recognized for years, yet solutions have remained elusive because it is ultimately a matter for businesses and the market to determine — not something that can be changed through mere slogans or political declarations.
Instead, a range of practical and actionable policies must be considered. For instance, as Yoon suggests, the government could provide tax incentives or other financial support to corporations that invest in improving working conditions for subcontracted workers as well as mandate wage ratio transparency between regular and nonregular workers to increase social pressure for fairer pay structures.
Without addressing the excessive protection of large corporations, public enterprises and regular employment and without narrowing the cost gap between regular and nonregular worker dismissals, the career ladder for workers like Jang Geu-rae will remain nonexistent.
Translated using generative AI and edited by Korea JoongAng Daily staff.
Many young job seekers, disheartened by repeated failures, may ultimately give up on employment efforts altogether, becoming part of the so-called NEET (Not in Education, Employment, or Training) group. According to the 2024 supplementary youth employment survey conducted as part of the Economically Active Population Survey, 24.7 percent of unemployed youth who had already graduated reported that they were not engaged in any productive activities. Young people withdrawing from the work force at the prime of their working lives is not only a personal misfortune but also a massive waste of national human capital.
However, simply advising young people to lower their expectations and start with nonregular or small-business jobs is not a viable solution. The rigid dual labor market structure, which clearly separates the primary job market — large corporations, public enterprises and regular employment — from the secondary job market — small businesses and nonregular employment — prevents mobility between the two segments. Once individuals enter the nonregular or small-business sector, climbing the ladder to higher-quality employment is extremely difficult. According to the BOK report, only 10.1 percent of nonregular workers transitioned to regular employment after one year, a significantly lower rate than in other advanced economies.
The fundamental solution to the youth employment crisis lies in comprehensive labor reform. Yoon Hee-sook, a renowned economist and head of the Yeouido Institute, a think tank affiliated with the People Power Party (PPP), addresses this issue in her latest book published this year, “Cold Case.” She cites the example of Jang Geu-rae, the contract worker from the hit drama “Misaeng” (2014), arguing that strictly limiting the use of nonregular employment to two years is counterproductive. Instead of imposing rigid employment restrictions, policymakers should focus on eliminating discrimination and improving working conditions for nonregular employees.
She makes a compelling argument: “If the government had outright banned the use of nonregular workers, Jang Geu-rae would never have gained on-the-job training, built valuable professional networks with his supervisors or had the chance to start his own business.” The key, she argues, is not to eliminate nonregular employment but to ensure a clear pathway for career progression.
The problem of labor market duality has been widely recognized for years, yet solutions have remained elusive because it is ultimately a matter for businesses and the market to determine — not something that can be changed through mere slogans or political declarations.
Instead, a range of practical and actionable policies must be considered. For instance, as Yoon suggests, the government could provide tax incentives or other financial support to corporations that invest in improving working conditions for subcontracted workers as well as mandate wage ratio transparency between regular and nonregular workers to increase social pressure for fairer pay structures.
Without addressing the excessive protection of large corporations, public enterprises and regular employment and without narrowing the cost gap between regular and nonregular worker dismissals, the career ladder for workers like Jang Geu-rae will remain nonexistent.
Translated using generative AI and edited by Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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