Young Koreans leave labor market amid population decline

[Photo by Yonhap]

Many young people in South Korea are giving up on job seeking activity amid the shrinking population, raising concerns that it may fuel a slowdown in the country’s labor market, a report showed Wednesday.

According to a report released by the Korea Labor Institute, the number of employed people increased by 397,000 in the first quarter of this year from a year ago and by 346,000 in the second quarter, resulting in a total increase of 372,000 in the first six months of the year.

The report also stated that the number of employed people in the second half of the year will stay below that of those in the first half, with an increase of about 253,000. It noted that the number of employed will gain 312,000 for the full year.

The growth rate stands at 1.3 percent in the first half, an estimated 0.9 percent in the second half, and an estimated 1.1 percent for the whole year.

The report noted that the job gain in the first half was mainly driven by women and individuals aged over 60.

Until the second half of last year, the number of men and women in the labor force grew at a similar pace.

In the first half of this year, however, industries and occupations with high concentrations of women gained workers while male-dominated sectors such as manufacturing and construction were hit harder by the slow economy.

The share of economically inactive women in their 30s has been on a decline since the fourth quarter of 2021, down by a 4 percentage point range in each of the last four quarters, indicating that more women are entering the labor market.

However, across all gender and age groups, the decline in the potential economically active population has not translated into actual employment, raising concerns that the labor market may be entering a gradual slowdown.

In the first half of the year, the number of potential job seekers fell by 405,000, and when considering the drop in the number of unemployed, the total number of unemployed people with a desire to work fell by 482,000 during the period.

On the other hand, the number of employed increased by a mere 372,000, suggesting that the economically inactive population has given up looking for work. Individuals in their 20s, in particular, shifted to the economically inactive population.

Apart from population decline, industry observers noted that the labor supply may shrink in the 20s.

“The proportion of ultra-short-term workers that work less than 15 hours per week who want additional jobs is high among young adults in their 20s,” said an official from the institute. “It is difficult to say that the situation is positive although, statistically, the extended unemployment rate is declining among young adults.”