Youth Employment Plummets in South Korea Amid AI Disruption and Economic Headwinds

South Korea's job market experienced a significant downturn in May, with the total number of employed individuals decreasing year-on-year for the first time in 17 months. The decline was particularly pronounced among young people aged 15-29, who saw a drop of 255,000 jobs, the largest decrease since January 2021.

This worrying trend is attributed to a confluence of factors impacting the labor market. The prolonged conflict in the Middle East has led to rising oil prices, supply chain disruptions, and potential export challenges. While the semiconductor industry is experiencing a boom, its job creation capacity is limited. Analysts suggest that the rapid spread of artificial intelligence is also a significant factor, with studies indicating that industries with higher AI exposure are seeing faster declines in youth employment, contrasting with an increase in employment for those over 50.

The situation poses a risk of exacerbating wealth and income inequality, as opportunities for young people entering the labor market shrink. The government's existing "Youth New Deal" policy, aimed at providing vocational training and work experience to about 100,000 individuals, is considered insufficient given the scale of the problem, with over 400,000 young people currently classified as "economically inactive" or "resting."

Experts are calling for a more robust and forward-thinking response from the government. This includes significantly strengthening education and vocational training programs tailored to the AI era, expanding direct income support like youth allowances to empower young people in their career paths, and diversifying growth engines beyond semiconductors to sectors like shipbuilding, energy, and biotechnology. Fostering the small and medium-sized enterprise ecosystem and startups is also crucial for creating high-quality jobs. Without more decisive action, the current employment shock risks becoming a deeply entrenched structural issue.