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Current Situation of Youth Employment and Best Practice Policy in Korea

Current Situation of Youth Employment and Best Practice Policy in Korea. Chae, Chang Kyun ( Korea Research Institute for Vocational Education & Training). Topics. 1. Current Status of Youth Employment in Korea. 2. Youth Employment Policies in Korea.

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Current Situation of Youth Employment and Best Practice Policy in Korea

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  1. Current Situationof Youth Employment and Best Practice Policy in Korea Chae,ChangKyun (Korea Research Institute for Vocational Education & Training)

  2. Topics 1. Current Status of Youth Employment in Korea 2. Youth Employment Policies in Korea 3. Case Study: Youth New Start Project

  3. 1. Current Status of Youth Employment in Korea • Low employment rate and High unemployment rate • Overall employment rate is stable but youth employment rate has dropped since mid of 2000s. • In 2010, youth unemployment rate was 7.6%, 2.2 times higher than total unemployment rate. Total and youth employment and unemployment rate, 2000-2011 Total employment rate Employment rate of ages 15 to 29 Total unemployment rate Unemployment rate of ages 15 to 29 Source: Statistics Korea, KOSIS

  4. 1. Current Status of Youth Employment in Korea • Long transition period from graduation till employment • Youth spends 11 months in getting their 1st job after graduation. • Compared to foreign countries, time spent for youth to get their 1st job is relatively long in Korea. (Time spent for college graduates : KOR 7.7, 11 EUR 5.8, JPN 6.0 months) Time spent for youth to get 1st job (Unit: 1000 persons, %) Source: Statistics Korea, ｢A Survey of Economically Active Population-The Youth｣, 2002-2011

  5. 1. Current Status of Youth Employment in Korea • Job quality is getting worse • Downward employment of college graduates began to appear in late 1990s, and has been worse since 2002. Downward employment trend by educational level, 1991-2006 Middle school or lower graduatesHigh school graduatesCollege graduates Source: Park, G W; Hong, S J (2009)

  6. 1. Current Status of Youth Employment in Korea • Over-education in Korea is a quite serious problem, compared to major advanced countries. • Korea(24%) > UK(18%) > France(15%) • 11 EUR (7%), Japan(14%) • Over-educated labor force in Sweden and Norway is 0% Ratio of over-educated college graduates by country (Unit: %) CHEERS survey data: (F2) How would you characterize the relationship between your field of study and your area of work? 2006 GOMS: (Q13) How do you regard your current job in comparison with your education level? Source: Chae, C K et al. (2009)

  7. 1. Current Status of Youth Employment in Korea • Employment in a professional occupation is declining. • Number of college or higher graduates working in professional occupation was decreased by 9%p over the past 13 years Changesin youth employment rate by occupation, 1996-2009 : college graduates + (Unit: %, %p) Source: Statistics Korea, source material of ｢A Survey of the Economically Active Population｣

  8. 1. Current Status of Youth Employment in Korea • Regular employment was decreased • 9%p dropped , 76.1% (2002) → 67.1% (2008) Size and percentage of young employees by employment type (Unit: 1000 persons, %) Source: Hwang, S J (2008)

  9. 1. Current Status of Youth Employment in Korea • Relative wage of youth employees was decreased • National Average Wage = 100, Youth Employees Wage 86.0(1997) → 77.4(2009) Relative wage level of youth employees, 1997-2009 (Unit: won, %) Note: Relative wage shows the relative wage level of each age group when the monthly average wage of all age groups is 100 every year. Source: Ministry of Employment and Labor, ｢A Basic Statistical Survey of Wage Structure」.

  10. 1. Current Status of Youth Employment in Korea • Frequentjob turnover • High job turnover rate of youth employees • Job turnover rate ofyouth is 2.5 times higher than core workforce aged 30-54. • High unemployment rate of youth employees is caused by frequent job changes as well as difficulty in getting jobs. Job turnover rates by age group (Unit: %) Source: KLIPS of each year, re-quoted from Nam, J R (2008).

  11. 1. Current Status of Youth Employment in Korea • Job mismatch is getting worse • While youth unemployment rate is high, SMEs have faced manpower shortage . • The Beveridge Curve’s distance from origin is getting far gradually since 2003. • Caused by expansion of higher educated youth, their higher standard in job choice, and the poor working conditions of SMEs. The Beveridge Curve in Korea, 1994-2008 Vacancy rate Unemployment rate Source: Statistics Korea, KOSIS, Ministry of Employment and Labor, Labor Statistics (http://laborstat.molab.go.kr/).

  12. 1. Current Status of Youth Employment in Korea • Background of youth employment problems in Korea • Oversupply of post-secondary educated • College enrollment rates have increased significantly from 33.2% in 1990 to 78.9% in 2010 College enrollment rates and total number of college graduates College graduates (1000 persons) College enrollment rate (%)

  13. 1. Current Status of Youth Employment in Korea • Reservation wage of youth is getting high • Due to higher education, young job seekers have higher standard of job choice → Their actual wage wasonly 60-70% of reservation wage in 2007. (Unit: 10,000 won, %) Gap between reservation wage and actual wage Source: Korea Employment Information Service

  14. 1. Current Status of Youth Employment in Korea • Decreased job opportunity preferred by youth • Jobs in large enterprises, public sectors and financial businesses have decreased by 651,000, from 4,093,000 in 1995 to 3,442,000 in 2006 (Unit: 10,000 persons) Fluctuation in number of job preferred by youth Source: Park, G W; Hong, S J (2009)

  15. 2. Youth Employment Policies in Korea • Changes of Labor market structure since Asian Financial Crisis in 1998 → The most damaged group is youth. → New or revised policies for youth employment have been planned and implemented every year, since the crisis. → Although various policies have been implemented, youth employment problems have kept continuously and sometimes got worse. • Comprehensive policies = short-term + long-term policies • However, strict policy evaluations have not been done yet.

  16. 2. Youth Employment Policies in Korea • Major policies : Creating jobs for youth • Fostering social enterprises run by youth • Creating jobs in public sectors • Expanding opportunities for SMEs to recruit interns • Supporting youth to initiate and start a business • Supporting overseas employment • Job sharing among generations

  17. 2. Youth Employment Policies in Korea • Major policies : Strengthen the linkage between schools and workplaces • Public release of graduates employment rate by college • Government support for “Employment Academy “ : Training college graduates in line with industry demand and requirement • Promote hiring “Special (vocational) High School “graduates

  18. 2. Youth Employment Policies in Korea • Major policies : reduce Job mismatches • Enhance career guidance in school : Increase the number of career counselors in school • Encourage youth to get jobs in SMEs • Build up a comprehensive job information network (e.g. : “Job Young” )

  19. 3. Case Study: Youth New Start Project • Project overview • Providing a personalized and comprehensive employment support service from career guidance to job placement • Participants : This service is for the unemployed who did not go to college, long-term jobless, youth at risk (those who dropped out of school etc.), NEET 

  20. 3. Case Study: Youth New Start Project • Composed of three phases • Depending on the characteristics of participant, some participants should pass through three phases, or can participate in only one phase, or in phase 1 and 2, or phase 1 and 3. Support programs by phase

  21. 3. Case Study: Youth New Start Project Results of the Youth New Start Project, 2008-10 (Unit: million won, person)

  22. 3. Case Study: Youth New Start Project • Major factors of good performance • Customized services to clients • Individual consulting services  Satisfaction in individual consulting at phase 1, 2009 • Package program : The project includes almost all active labor market policies • 

  23. 3. Case Study: Youth New Start Project Participation rates by phase, 2010 (Unit: %) Participation rates in phase 2 programs, 2009 (Unit: %)

  24. 3. Case Study: Youth New Start Project • Targeting vulnerable groups Education level and type of participants, 2010 (Unit: %) Source: Recompiled from Ryu, J S et al. (2010) • Private agencies took complete responsibility for offering services to 40% of participants

  25. 3. Case Study : Youth New Start Project • Outcomes  Performance of Youth New Start Project, 2009

  26. 3. Case Study: Youth New Start Project Before / After the Youth New Start Project

  27. 3. Case Study: Youth New Start Project • Suggestion for Improvement • Course completion rates for some vulnerable groups were low. →More incentives can encourage participants to complete their course. • Employment rate oriented evaluation system may cause Creaming & parking problem → More sophisticated evaluation method should be developed (e.g. Job quality index can be used as one of criteria). • The effectiveness of the program depends on the effectiveness of active labor market policies and their infrastructure. • Effective, but expensive → cost-efficiency should be increased • 

  28. THANK YOU Q & A

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