The government and major local industry associations of South Korea have agreed to create 200,000 jobs for youth by the end of 2017. This will include 75,000 full-time jobs from the public and private sectors while the other 125,000 will mostly consist of new internships from private companies, Yonhap News reports. This move is ahead of the expected temporary job shortages increase in the country.
In a joint declaration, signed by the finance ministry and six leading business organisations, the private sector promised complete support and cooperation in the creation of new jobs for youth, including the largest Federation of Korean Industries.
From 2016, multinationals and public organisations are required to increase the retirement age of employees to 60 or older, whereas the number of youth in 20s is expected to sharply increase over the next several years. Currently, the country has no legal retirement age and the actual retirement age stood at 58 years as of 2014, as implemented by corporate.
Referring to temporary but sharp decline in employment, the finance ministry of South Korea said, “Implementation of the compulsory retirement age next year is feared to lead to an ’employment cliff’ situation among the young people over the next three to four years.” To avert the youth employment cliff, government plans to create some 40,000 jobs mainly for youth until 2017, while private sector organisations plan to create vacancies of some 160,000 jobs, which is more than usual over the period.
Finance Minister Choi Kyung-hwan said, ““We promise that the government and the business sector will together implement the measures to create 200,000 new job opportunities for the youth by 2017. We hope today’s promise will help remove problems now facing our young people while also providing hope to our future generations.”
Manufacturing majors of South Korea have been expanding operations to countries wherein cheap labour is available, however the domestic services sector is not able to catch up pace with the competition to absorb the rising number of youth populace into the workforce.
With lack of employment opportunities in the South Korean market, a majority of the youth prepare for employment in the campus or resort to take up part-time work opportunities at lower wages. A noteworthy fact is among those in the age group of 15 to 29, the unemployment rate has increased to 10.1 percent in the first half of 2015, from 9.0 percent in the whole of 2014. This is the recorded highest post the 1997/98 Asia financial crisis.
In comparison to many other advanced nations, the rate though is much lower. The continued rise in unemployment rate in South Korea has been a major concern for many companies and foreseen threat to Asia’s fourth-largest economy already facing slow growth.
Hyundai Motor Group plans to hire 9,500 workers by the end of 2015, which will be slightly higher than the last year hiring of 9,100 workers. LG joined the movement with renewed commitment to hire 12,000 new workers this year, as the same of last year, CanIndia reported.
To encourage private companies to hire more full-time workers, the government will be offering a tax break up to 2 million won (US$1,705) for each intern or a part-time employee turned into a full-time worker, according to the ministry.
“Also, the government will provide up to 10.8 million won in cash for each new full-time worker employed at companies that expand their overall workforce by introducing a wage peak, a mechanism to create additional job openings for new and young workers by lowering the wages of those nearing retirement in exchange for extending their time on the job,” Yonhap News reports.