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The paradox of labor policy and the youth employment freeze

Published: 08 Sep. 2025, 10:13

Kim Dong-ho

The author is an editorial writer at the JoongAng Ilbo.

On Friday, a group of young people voiced their frustrations at a roundtable organized by the Korea Advanced Forum, marking its 20th anniversary. The forum was established in 2005 by Nam Duck-woo, a former prime minister who had earlier served as finance minister after leaving his position as a professor at Sogang University during the Park Chung Hee administration. While the conference focused mainly on strategies to sustain Korea’s economic growth, what lingered most was the testimony of younger participants describing the difficulty of finding work.

Despite living in a country whose per capita income now surpasses Japan’s, today’s younger generation finds itself mired in employment insecurity. Official unemployment among those aged 15 to 29 stood at 5.5 percent in July, but the real figure, including discouraged job seekers, reached 16.1 percent. The employment rate for that same age group was 45.8 percent, the lowest July figure in four years.

Job seekers visit company booths at the 2025 KB Good Job Excellent Companies Job Fair held at Coex in Gangnam District, Seoul, on May 26. [YONHAP]

These statistics are not new. Yet for those affected, joblessness remains an immediate source of distress. What is worrying is the apparent complacency among older generations, who either ignore the problem or treat it as a background issue. On Thursday, the heads of the country’s two main labor unions met with President Lee Jae Myung and urged him to extend the statutory retirement age to 65, citing Korea’s rapid transition into a super-aged society.

It is true that unions have contributed to expanding worker rights. The passage of the "Yellow Envelope Act" opened new bargaining rights for subcontracted workers and promised improvements for vulnerable groups. Yet these gains may come at a cost to younger workers. One student at the forum noted that the number of companies participating in Seoul National University’s (SNU) fall job fair would fall by 32 percent from last year, down to 91 — the smallest figure since 2007. “If this is happening at Seoul National, what about other universities?” the student asked. Even if the government fulfills its pledge to create “10 more SNUs,” what value will those diplomas have without jobs?

The youth view of the labor market is shaped by deep anxiety. The spread of AI is rapidly automating the entry-level tasks — data organization, drafting reports — that used to provide new employees with crucial first experience. That learning ground is shrinking. The prospect of mandatory retirement extension only compounds the sense of exclusion. With seniority-based pay systems still entrenched, having older employees in positions longer leaves fewer opportunities for younger workers. Studies following the 2016 implementation of the retirement age of 60 consistently found a crowding-out effect on youth employment.

For many, the consequences are personal. Young people increasingly delay graduation, pursue graduate school or collect professional certifications, leading to first employment well into their thirties. This pushes back asset accumulation and contributes to declining marriages and the birthrate. Others drop out of the job hunt altogether. In July, 420,000 people in their twenties were categorized as “taking a rest” rather than seeking work.

The Yellow Envelope Act has further heightened fears. The day after its passage, shares of robotics and factory automation companies surged. Korea already has the world’s highest robot density, with 1,012 robots per 10,000 workers, six times the global average. One young forum participant compared the bill’s effect to the rapid minimum wage hikes that drove up the number of self-service kiosks. This law, they worried, would accelerate automation and reduce opportunities for human workers.

Criticism of a retirement age extension was sharper still. The benefits, the youth argued, would accrue mainly to those already secure in large corporations, state enterprises and the civil service. With labor budgets finite, lengthening tenures across the board risks depressing hiring and eroding corporate competitiveness. It is this paradox of labor policy — intended to strengthen protections but in practice constraining opportunities — that has made the voices of the young more urgent. As one participant put it, “Before addressing the income gap, shouldn’t we first give young people the chance to start?”

President Lee Jae Myung (center) listens to remarks by Kim Dong-myung (left), head of the Federation of Korean Trade Unions, and Yang Kyung-soo, head of the Korean Confederation of Trade Unions, during a luncheon meeting at the presidential office in Yongsan District, Seoul, on Sept. 4. [YONHAP]

Alternatives exist. One proposal is to encourage re-employment rather than a uniform age extension. In Japan, the statutory retirement age remains 60. Companies must provide opportunities until 65, but they can choose among delaying retirement, abolishing it or rehiring workers according to their own conditions. The system preserves flexibility while avoiding a one-size-fits-all barrier to youth employment.

The lesson is not new. Dosan Ahn Chang-ho, an early 20th-century independence leader and educator who emphasized moral reform and civic responsibility, once warned, “Despair is the death of youth, and when youth dies, the nation dies.” If policies shaped primarily by large labor unions bring about a new ice age for young workers, responsibility will rest on those who failed to act. To avoid such failure, the government must begin not by protecting positions already secure, but by opening paths for those still waiting for their first opportunity.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.