Business Size and Youth Employment: Patterns and Policy Implications

The youth unemployment rate in Korea stood at eight percent as of 2021. The expanded youth unemployment rate, however, reached 23 percent in that same year, indicating that at least one in every four or five young persons in Korea was struggling to find suitable work. Although the unemployment rate among youth has been on a gradual decline for some time now, the margin of increase in the youth employment rate pales in comparison to the employment rates of middle-aged and senior workers. An analysis of business sizes and youth employment revealed that, whereas the employment rates for other age groups have risen greatly in businesses at both extremes of the size spectrum, youth employment has not risen significantly across businesses of any size. The employment rates at the extremes of the business size spectrum can be explained by two different causes. Small employers employing fewer than 30 workers can be seen to offer “safety net” jobs for young people, as these jobs have relatively low barriers to entry and are relatively low-skilled. Large employers with 1,000 or more workers, on the other hand, are seen as offering quality jobs with good working conditions and a high level of job security. An additional analysis of changes in employment rates involving businesses at the two extremes of the size spectrum across industries further shows that youth employment has noticeably increased among those working in low-skilled jobs at restaurants, cafes, convenience stores, and so forth, as well as in emerging industries, such as programming and battery manufacturing. Low-skilled jobs may hold short-term appeal to young jobseekers, but they offer little security. Neither is it particularly desirable for young people to work in these jobs past middle age and into retirement. Emerging industries, on the other hand, are better poised to develop specialized workforces and build up high levels of human capital among the working population. In designing policy programs, policymakers need to consider emerging industries with a view toward not only enhancing businesses’ competitiveness, but also improving young jobseekers’ chances of landing secure and sustainable employment.