SEOUL (Reuters) — South Korea said on Monday the government and major local industry associations have agreed to create some 200,000 jobs for young people until 2017, ahead of an expected temporary rise in job shortages.
Big companies and public organizations are required by law to set the retirement age at 60 or older from next year whereas the number of people in their 20s is due to increase sharply over the next several years, the finance ministry said.
There is no legal retirement age in South Korea at present and the actual retirement age stood at 58 years as of 2014 among big companies, according to an analysis of collective bargaining agreements, a labour ministry official said.
"Implementation of the compulsory retirement age next year is feared to lead to an 'employment cliff' situation among the young people over the next three to four years," the finance ministry said in a statement, referring to a temporary but severe decline in employment.
The finance ministry said the government aims to create some 40,000 new jobs mainly for young people until 2017, while private-sector organisations have agreed to try to offer some 160,000 more jobs than usual over the period.
Big manufacturing companies have been expanding more in countries with cheap labour than in South Korea, while the domestic services sector is not growing fast enough to absorb the still rising numbers of young people entering the workforce.
"The college enrolment rate has been too high for a while in this country and this was a main source of the problem," said John Park, 29, who is still looking for a job since graduating from a prestigious university in Seoul early this year.
As employment opportunities grew scarcer, an increasing number of young South Koreans spend more time on the campus while preparing for employment or resort to taking up part-time work on extremely low wages.
The unemployment rate among those aged between 15 and 29 rose to 10.1 per cent for the first half of this year, the highest since the 1997/98 Asia financial crisis, from an average of 9.0 per cent for the whole of last year.
While the rate is much lower than in many other advanced countries, the continued rise in the rate in South Korea has been posing an additional threat to Asia's fourth-largest economy already faced with slowing growth.