December 17, 2025
SEOUL – South Korea’s most troubling jobs problem is hiding in plain sight. By the headline figures, the labor market appears robust. Employment rates have reached record highs. The jobless rate sits near what economists would regard as full employment.
Yet beneath this reassuring surface, a quiet erosion is unfolding. For 19 consecutive months, youth employment has declined. The economy is creating jobs, just not for the generation expected to sustain it.
This is not a cyclical dip or a passing mismatch. It is a structural failure that standard indicators struggle to capture. Government data shows that the employment rate for those aged 15-29 fell to 44.3 percent in November, below the rate for people over 60.
More than 700,000 people in their 20s and 30s are now classified as economically inactive, opting to remain at rest rather than search for work. They do not appear in unemployment figures, yet they sit at the center of the country’s economic vulnerability.
The most immediate driver is a sharp contraction in the supply of quality jobs. Large corporations shed roughly 80,000 positions in a single year, the steepest decline on record. Small and medium-sized firms also posted their first net job losses since data collection began. Manufacturing, construction and other key sectors continue to retrench.
Overall job growth has slowed to its weakest pace on record even as aggregate totals rise, lifted largely by publicly funded care and welfare positions concentrated among older workers.
Hiring practices have shifted just as dramatically. Mass entry-level recruitment has been replaced by rolling, experience-driven hiring. For companies navigating uncertainty, the logic is clear. For new graduates, the entry gate often closes before it comes into view.
Alongside this contraction, a deeper distortion has taken hold. While young people face dwindling opportunities, fast-growing industries are short of workers. By 2029, sectors such as AI, cloud computing and big data are projected to face shortages approaching 580,000 workers. Education and training systems have lagged behind the pace of industrial change. At the same time, top science students are flowing into medical schools at unprecedented rates, weakening the domestic pipeline for advanced technology talent.
The consequences extend well beyond foregone jobs. Surveys show that more than 60 percent of college seniors and recent graduates are either passively job seeking or have disengaged altogether. After submitting an average of more than 13 applications, their document screening success rate remains barely above 2 percent.
Repeated rejection gradually gives way to withdrawal. The longer young people remain outside the labor market, the steeper the barrier to reentry becomes.
Policy responses have struggled to match the scale of the challenge. Training programs and internships have expanded, but their reach is inherently limited. They serve those still inclined to participate, not the growing cohort that has stepped away entirely. High-profile efforts to prod large firms into announcing hiring plans have produced headlines rather than lasting momentum.
At its core, this is an ecosystem failure. Labor markets, education systems and industrial policy are moving out of sync. Addressing it will require more than incremental fixes. Firms need incentives and flexibility to hire and train at scale. Education must be closely aligned with emerging industries through deeper collaboration between universities and companies. Government, meanwhile, must actively identify and support economically inactive young people through tailored counseling and career guidance before disengagement becomes permanent.
South Korea’s employment statistics may look strong, but they rest on a narrowing base. The cost of delayed reforms will not show up in the next data release. It will accumulate quietly, in weaker potential growth and in a workforce that was counted, but never fully mobilized.