SEOUL, October 26 (AJP) — Young Koreans are finding it increasingly difficult to secure permanent jobs, with their entry rate relative to prime-age workers falling about 15 to 20 percent from past levels, a study by Bank of Korea (BOK) researchers showed Monday.
The findings were published in an issue note on weak youth employment by Hwang Soo-bin, Jeong Kang-hee and Chung Sung-yup of the BOK's Research Department.
The researchers found that stagnant labor demand has disproportionately affected people aged 15 to 29 who are entering the workforce.
Their estimate showed that the rate at which young people entered permanent employment relative to workers aged 30 to 59 has fallen by about 15 to 20 percent compared with earlier levels.
The study counted permanent employees who had worked at their current workplace for less than one year as recent entrants.
The decline has been particularly pronounced among young people looking for their first job.
Among 25- to 29-year-olds who had graduated from or left school, the adjusted number entering their first permanent job fell to 45 per 1,000 in 2023-26 from 48 in 2014-19.
The number entering permanent employment with previous work experience, by contrast, rose to 121 per 1,000 from 102 over the same periods.
The researchers linked the divergence to a shift in corporate hiring away from entry-level recruitment toward experienced workers who can be deployed immediately.
Among unemployed or economically inactive young people who wanted to work at a large company, 88 percent failed to enter what the study calls the primary labor market within the following year.
The study defines the primary labor market as permanent positions at private companies with at least 300 employees, while jobs at smaller companies and temporary or daily positions at larger firms are classified separately.
Young people with no previous work experience were even more likely to remain unemployed or outside the labor force.
Headline employment indicators have also weakened, although they remain better than during the previous youth employment downturn from 2014 to 2019.
The seasonally adjusted unemployment rate for people aged 15 to 29 rose to 6.6 percent in the first nine months of 2026 from 6.4 percent in 2022, while their employment rate fell to 43.7 percent from 46.6 percent.
The deterioration has been more visible in job quality, with a rising share of young workers moving into temporary and daily jobs rather than waiting unemployed for permanent positions.
The researchers also estimated that the youth employment rate from 2023 through the first half of 2026 averaged 0.6 percentage point below levels predicted by pre-pandemic relationships with industrial production, services output, exports and financial conditions.
They attributed the gap to downward pressures that could not be explained by the usual economic cycle alone.
Korea's changing industrial structure was identified as one of the main factors behind weaker labor demand.
Growth has increasingly been led by information technology manufacturing, where production has risen sharply without a comparable increase in permanent hiring, while non-IT manufacturing and services — which account for a larger share of such hiring — have been weaker.
The study also found that youth permanent employment is closely tied to services employment, leaving young workers more exposed when growth is concentrated in capital-intensive IT manufacturing.
The spread of artificial intelligence has coincided with a further shift toward experienced hiring.
Jobs and industries with greater exposure to AI showed a stronger preference for experienced workers and weaker demand for basic tasks traditionally handled by entry-level employees.
The researchers said the pattern was especially visible in more advanced, AI-exposed industries, where weaker youth employment reflected not only departures by existing workers but fewer new entrants.
Labor mobility has weakened at the same time.
Young workers already employed in the primary labor market have become more likely to remain there, while entry by unemployed young people, re-entry after leaving and moves from smaller or less stable jobs into large-company permanent positions have all declined.
The researchers described the pattern as stronger "job hugging" among insiders and a greater risk of young workers becoming locked into jobs outside the primary labor market.
They said the reduced mobility could make it harder for young workers to accumulate skills and experience needed to move into better jobs even if labor demand later recovers.
The study said employment programs focused on training and job matching would have limited impact unless they were accompanied by measures addressing labor demand.
It called for stronger links between IT manufacturing and related industries and domestic demand, closer coordination between universities and workplace skill needs, and greater flexibility for companies to hire workers as demand changes.
The researchers also pointed to rigid employment protection and seniority-based wage systems as factors that can raise the cost of taking on new workers.
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