SEOUL, September 08 (AJP) - On paper, South Korea has rarely looked richer. For its young people, it has rarely been harder to get a foothold.
Real gross national income jumped 15.6 percent in the second quarter from a year earlier, the strongest increase since the fourth quarter of 1988, while per-capita GNI now has a strong chance of topping $40,000 for the first time.
Much of the lift has come from the AI chip boom, which is showering export income and corporate profits on an economy dominated by Samsung Electronics and SK hynix.
Yet the same AI transition is proving far less generous to young Koreans trying to enter the labor market.
Youth employment fell for a 45th consecutive month in July. Another decline in August, when the government releases its latest employment report Wednesday, would stretch the contraction to nearly four years.
The contrast is becoming one of the starkest fault lines in South Korea's AI-led expansion: the industries generating extraordinary export earnings are highly capital-intensive, while technological change and a shift toward experienced hiring are narrowing the traditional entry routes into corporate Korea.
Total employment increased by 108,000 from a year earlier to 29.14 million in July. The number of employed people aged 15 to 29, however, fell by 191,000 to 3.44 million.
The youth employment rate dropped 1.6 percentage points to 44.2 percent, while the unemployment rate rose 1.3 percentage points to 6.8 percent.
A shrinking youth population explains only part of the fall.
At the other end of the economy, exports jumped 68.7 percent from a year earlier to $98.25 billion in August, the third-highest monthly total on record, according to the Ministry of Trade, Industry and Resources.
Semiconductor exports surged 209 percent to a record $46.65 billion as higher capital expenditure by global technology companies sustained demand for artificial intelligence infrastructure.
The boom, however, does not translate easily into headcount.
Bin Hyun-jun, director general of the Social Statistics Bureau at the Ministry of Data and Statistics, said at the July employment briefing that semiconductors have a relatively low employment multiplier and require large-scale capital equipment. He said the industry's structure limits the amount of hiring generated by increases in production and exports.
A manufacturing recovery that skips the young
More recent administrative data suggest the divergence persisted into August even as insured employment in manufacturing began to recover.
Employment insurance subscribers increased by 278,000 from a year earlier to 15.91 million in August, according to the Ministry of Employment and Labor.
Manufacturing subscribers rose by 2,000, their first annual increase in 15 months.
Younger workers again moved in the opposite direction.
Enrollment among workers aged 29 or younger fell by 55,700, or 2.4 percent, extending its decline to 48 consecutive months since September 2022.
Young subscribers fell by 23,000 in manufacturing and 13,000 in information and communications, leaving them behind even as overall manufacturing enrollment returned to growth.
Changes in recruitment practices provide another part of the explanation.
Bin said the shift from large-scale annual recruitment toward rolling and experienced-hire recruitment has made employment conditions more difficult for young people than under the previous hiring system.
South Korea's major commercial banks offer one example.
KB Kookmin Bank, Shinhan Bank, Hana Bank and Woori Bank recruited 485 entry-level employees in the first half, down 18.5 percent from 595 a year earlier.
Bank officials have cited the expansion of mobile and internet banking and lower demand for branch-based work as factors reducing traditional staffing needs. Recruitment has increasingly shifted toward specialized positions.
KB Kookmin separates recruitment for IT and AI-platform development roles, while Hana created a regular experienced-hire track last year for specialists in areas including AI, data analysis and digital technologies.
The pattern leaves new graduates facing a familiar contradiction: companies say they need more AI talent, but increasingly want workers who already have the experience to apply it.
AI and a broken first rung
The Bank of Korea has found signs that technological change itself may be adding to the pressure on entry-level employment.
Youth employment fell by 285,000 between June 2022 and June 2026, according to a recent BOK Issue Note. Industries highly exposed to AI accounted for 268,000, or 94 percent, of the decline.
Employment fell particularly sharply among young workers in information services, publishing, computer programming and professional services.
Workers in their 50s, by contrast, continued to gain jobs in the same industries.
The BOK described the pattern as consistent with "seniority-biased technological change," in which technological change affects junior and experienced workers differently.
Industries with a higher share of AI use for automation recorded larger declines in youth employment, while no comparable pattern emerged where AI was primarily used to augment human work.
AI may instead be eating into the first rung of the career ladder.
Junior workers have traditionally performed research, basic analysis, documentation, coding and other tasks through which they gain experience. Generative AI can perform or accelerate many of those functions, potentially allowing companies to get more output from smaller teams of experienced employees.
Education has offered little insulation.
Since November 2022, the unemployment rate has averaged 7.0 percent among young people with a bachelor's degree or higher, compared with 5.4 percent among those with an associate degree or lower.
The BOK cautioned that its findings do not establish that AI caused the decline in youth employment.
The unwinding of pandemic-era overhiring, companies' growing preference for experienced recruits, weaker in-house training and changes in working practices may also have contributed, with AI potentially accelerating trends already underway.
Waiting longer for the first job
The difficulty of entering the labor market is also visible in a supplementary youth survey by the Ministry of Data and Statistics.
Among people aged 15 to 29 who had graduated from, withdrawn from or otherwise completed their final level of education, 84.8 percent had ever been employed as of May, down 1.6 percentage points from a year earlier.
Those whose first job was paid employment took an average of 11.2 months to find work.
Longer-term exclusion is becoming more visible as well.
Among young people who had completed their education but remained without work, 605,000 had been out of employment for at least one year. They accounted for 48.6 percent of the group, the highest share since 2009.
Another 241,000 had been without work for at least three years, accounting for a record 19.4 percent since the series began in 2007.
Kim Rak-hyun, director of the ministry's Employment Statistics Division, said ratios were more informative than absolute numbers when assessing long-term youth joblessness because the population aged 15 to 29 itself is shrinking.
There are tentative signs that some young people may be moving back toward the labor market.
The number classified as "resting," meaning they were outside employment and were neither actively studying nor seeking work, fell by 69,000 from a year earlier to 367,000 in July. The decline extended to six months.
Newly registered job seekers aged 29 or younger on the government's Work24 platform increased by 1,800 from a year earlier in August, even as new registrations across all age groups fell by 1,000.
Neither measure shows whether renewed labor-market participation is translating into actual employment.
Government tries to rebuild the entry route
The government has acknowledged that the weakness is spreading beyond the youngest workers.
Its youth employment recovery plan released Aug. 28 showed that the employment rate for people aged 20 to 24 fell from 46.0 percent in 2022 to 43.6 percent in 2025.
The rate for those aged 25 to 29, previously more resilient, also began declining in 2025.
The government cited a lack of experience, labor-market duality and career disruption around the pandemic among the barriers to entry.
It pledged to train more than 300,000 people for advanced and youth-preferred industries and create more than 300,000 jobs and startup opportunities by 2030.
Training more workers for advanced industries, however, will not by itself resolve the mismatch if those industries continue expanding output faster than employment or increasingly reserve new positions for experienced recruits.
The Ministry of Data and Statistics is scheduled to release its August employment report at 8 a.m. Wednesday.
Another decline in the number of employed people aged 15 to 29 would extend the current contraction to 46 months.
The youth employment rate, unemployment rate and number of young people classified as resting will offer clues as to whether tentative signs of renewed job-seeking are finally translating into work.
The larger question is harder.
South Korea is becoming richer on the back of AI, semiconductors and an export machine operating at unprecedented scale. The test now is whether the boom can rebuild the bottom rung of the career ladder — or leave a generation of young Koreans watching the country's newfound prosperity from outside.
AJP Takeaways
- South Korea's AI and semiconductor boom is lifting national income and exports, but youth employment fell for a 45th consecutive month in July and another decline in August would extend the slump to 46 months.
- South Korea's manufacturing employment insurance enrollment returned to growth in August for the first time in 15 months, while enrollment among workers aged 29 or younger fell by 55,700 and declined sharply in manufacturing and information and communications.
- The Bank of Korea found that AI-high-exposure industries accounted for 268,000, or 94 percent, of the decline in youth employment between June 2022 and June 2026, while cautioning that the evidence does not establish that AI caused the decline.
- South Korea's young labor-market entrants are taking an average 11.2 months to secure a first paid job, while 19.4 percent of young people who completed their education but remained unemployed had been without work for at least three years, the highest share since the series began in 2007.
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