Korea’s ‘N-Po’ Generation Looks to New Administration for Jobs
May 31, 2017
Less than a month into his new presidency, South Korea’s new leader, Moon Jae-in, already faces a multitude of challenges, foremost of which are heightened tensions on the Peninsula over North Korea’s missile threat. But as the new administration sets its policy agenda, the concerning rise in youth unemployment will no doubt also be near the top.
The jobless rate among 15 to 29 year olds in Korea has been increasing over the past five years, with more than 560,000 youth classified as unemployed in March 2017, according to government figures. The percentage of unemployed youth between the ages of 15 and 19 has been rising sharply since 2012, reaching an all-time high of 11.3 percent in March 2017. Given that the unemployment rates in other age groups remained rather stable, it’s evident that the job market has been harsher for the younger generation in recent years.
While Korea’s unemployment crisis is complex, three main factors are contributing to the recent rise:
1) Due to the country’s prolonged economic slugishness as well as the change in the industrial structure, the creation of new jobs or investment in employing entry-level, first-time workers is difficult.
2) Because Korean youth have the highest education levels in history (nearly 80 percent of high school graduates attend college), the demand for jobs in the lower skills job market has substantially decreased.
3) Job prospects for youth in the high-quality job market are limited due to Korea’s rapidly aging society and older workers dominating the job market.
So what are the implications of this phenomenon? It means that after graduating from college, many who have studied for years and taken endless exams will still face the reality of not being able to find a job for a very long time. For those lucky enough to find a job, they must figure out whether the cost of getting married, buying a home, or having children is even a possibility.
When it comes to cost of living versus income level, the Seoul Metropolitan Area, where nearly half of Korea’s 50 million population lives, is one of the world’s most expensive areas to live in. The city’s price-to-income ratio (PIR) of 16.64 percent is larger than other major cities such as Vancouver and San Francisco, with an average Korean needing to save all their income for almost 17 years to buy a home. These sacrifices have led the younger generation to dub themselves the “n-Po” Generation, “n” being a variable of exponential growth with no upper limit, and “Po” which means “give-up” in Korean. In 2015, it all started from the “3-Po” Generation, giving up dating, marrying, and having children, which has now advanced into a variable with no limit. In other words, Korean youth are essentially economically inactive.
The new administration: The J-Nomics
Korea’s ability to peacefully remove Park Geun-hye from office, and swiftly elect a successor in a fair electoral process, speaks to the democratic power of the country, and the potential for the new administration. Indeed, President Moon attracted the most support from voters in their 20s, 30s, and 40s, with an average turnout of just over 52 percent among this age group.
President Moon continually called himself the “jobs president” during his campaign. Within days of taking office, President Moon unveiled his “J-Nomics” reform agenda, with a focus on the economy, and in particular, the youth unemployment crisis. This includes creating 1.3 million jobs over his five-year presidency, 810,000 of which would be in the public sector, jobs that are particularly sought after by young Koreans for their generous pensions and stability. He is also looking to the private sector to reduce what Korea is infamously known for as having the “world’s longest working hours” by encouraging firms to allow workers to take their holidays, which in theory could create an extra 500,000 jobs.
Other policies include increasing higher-quality jobs by combating the exploitation of long-term temporary workers by substituting them with regular workers and through increasing the minimum wage from $ 5.76 to $8.90 by 2020. Soon after his election, President Moon targeted the Incheon Airport to make temporary employees into permanent employees. However, there have been concerns from smaller businesses as they rely heavily on lower cost employees who are on temporary contracts, and who try to save extra labor expenses by keeping their current employees and making them work longer hours rather than hiring new ones.
The outlook ahead
Some experts argue that now is the perfect time for government intervention in the economy, as the past two administrations’ economic approaches through tax cuts and investments in the private sector haven’t brought down the unemployment rate. As income inequality increases, the number of heavily indebted families now exceeds 1.8 million, triggering the Moon administration to declare a national emergency situation.
The government budget is expected to reach (KRW) 17 trillion by the end of Moon’s term, with a 7 percent increase each year. This follows expanding the sources of tax income, reforming tax cuts or exemptions for big corporations or high-income earners, and an overall increase in taxes. In addition, the expected reform policies for the family-own businesses, called chaebols, could mean further growth for the economy.
After a tumultuous year, Koreans, and particularly the youth, are optimistic about the new administration. As many Koreans said just before the election; “Whoever gets elected, they must do it well this time.” For Korea’s young democracy, that hope now lies in the Moon administration.
Soomin Jun is a project officer at The Asia Foundation’s Women’s Business Center and Incubator Project in Mongolia, funded by the Korean International Cooperation Agency’s (KOICA) ODA Young Professional Program. The views and opinions expressed here are those of the author and not those of The Asia Foundation or its funders.
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