HR Country Report: South Korea's graduates without a cause

The nation's teenage-focused pop culture may have swept the world, but back at home everyday youths are struggling to secure jobs. HRM Magazine finds out why so many young degree-holders are finding themselves on the sidelines.

For all the glamour of Hallyu, a recently-coined term referring to the diffusion of Korean culture beyond its shores, the economic situation is much bleaker back home.

Since late last year, the biggest concern for South Korea has been the plight of jobseekers in their late teens and 20s.

In March last year, youth unemployment rose to its highest level in decades, with 12.5% of people aged 15 to 29 finding themselves jobless. That number had stabilised at 8.2% by November, but grew again to 11.3% in March 2017, the same month former President Park Geun-hye was impeached and removed from office. 

The timing is hardly a coincidence. It was during the Park administration that unemployment across the board skyrocketed. So it’s also unsurprising that her shock dismissal would have ripple effects throughout the economy.

Although Park, the first-ever elected female head of state in East Asia, was turfed for misusing her power through an unauthorised aide, her government’s inability to lower unemployment was also cited as a key reason for record low approval ratings and eventual loss of favour among 20 somethings.

Still, Park and her cabinet shouldn’t be sidled with all the blame for South Korea’s economy. Total employment was already on a downward slide when Park took over. Furthermore, as Hong Junpyo, a research fellow at Hyundai Research Institute in Seoul, notes, Park’s team did attempt to create more public sector jobs and welfare services for the unemployed, but their efforts were ineffective in the face of that already sluggish economy.

Desperate times for jobseekers

At nearly three times the nation’s overall jobless rate, South Korea’s 11.3% youth unemployment today is at a critical point.

Despite this being relatively low compared to other Organisation for Economic Co-operation and Development (OECD) countries, where youth joblessness hovers between the 22% and 16% marks, the situation in South Korea is worrying because numbers there have been worsening every year since 2012.

Compared to its neighbour Japan, which has seen youth unemployment fall consistently since 2010, South Korea has seen those numbers average 9.3% in 2016, up almost two percentage points from four years earlier.

The government has acknowledged that these are desperate times for all citizens, not just millennials and Generation Z.

“Not only is the economy not in good shape and not creating enough ‘good’ jobs now, but winter is also a cold season for job seekers, with hiring by large conglomerates kicking off in spring or summer,” Kim Yi-han, director of the Ministry of Finance’s policy planning division said.

Lack of quality jobs

But the employment outlook for school leavers in particular is more complicated than just the hiring changes across seasons, Mira Lee, Managing Director of digital industrial company General Electric’s (GE) Society of HR for South Korea, tells HRM Magazine.

“Depending on who you ask, you will get different answers,” she says. “Some people would say it is because of economic slowdown; some would say it is because of demographic changes; and some would say it is because of labour policies.

“But as a corporate HR executive, I think the main problem is there is just a lack of quality jobs for fresh graduates.”

Lee says the low number of university graduates gaining employment is not due to the quantity of available jobs, but the quality. As a result, these graduates tend to defer their graduation by a few semesters, until they find a suitable position.

“They spend a lot of time in preparing the job applications and making their résumés stronger with different degrees and internships, and so on,” she explains.

Due to this lack of “quality” jobs, more university graduates find themselves competing for fewer jobs from a smaller pool of companies. Government roles, for example, receive some 172 applicants for every position advertised, while conglomerates like Samsung see an average of 100,000 students sitting for their annual entrance exams each year.

“So what is happening is that the young talents are becoming selective, and are choosing very specific job categories or companies where they see quality jobs,” says Lee.

Another reason for the high rate of youth joblessness, according to Lee, is that companies are operating more leanly today. Individuals are now given more responsibilities and asked to contribute more. Companies, consequently, prefer hiring more experienced professionals than entry-level staff.

The education paradox

Paul Evans, Emeritus Professor of Organisational Behaviour at Insead, and academic director of its Global Talent Competitiveness Index, sees the situation very differently. He believes the main cause of youth unemployment lies with the country’s “paradoxical” education system, which has produced many academically-qualified individuals who still lack employable skills.

“There is a deep structural problem with South Korea’s education system. It’s regarded as one of the top education systems in the world, yet the reality is many students face great difficulty in finding jobs,” says Evans.

“The question is, is the system working if graduates can’t actually find jobs?”

Evans says the system may have worked well in the past, but is no longer effective for the market conditions of today.

Social stubbornness has led to a culture that severely undervalues vocational training and expertise-based education. Instead, society views the university-backed career path as more prestigious and financially rewarding.

“In Korea, everybody wants to go to the top three universities: Seoul National University, Korea University, and Yonsei University,” says Evans. 

“Families view vocational training as a second choice. So you have these students cramming in classes, when they should be going out and doing things and gaining experience.

“Instead, they are studying till late in the evening to try and get into the top universities under the supposition that this will help get them good jobs.”

While it is true that graduates from those three institutions go on to secure solid careers in top organisations, the limited number of student places mean many high schoolers end up in the remaining universities that have more broad-based, non-specific curriculum.

The result is a large number of graduates from these academies leave without acquiring any hard employable skills. They find themselves unable to to compete with their counterparts from the top varsities.

At the same time, Evans says these degree-holders often have unreasonable salary expectations, further slimming their chances of finding a suitable employer match.

Highly educated, but unemployable

Indeed, national statistics show that there is a significant skills gap across industries, and small and medium enterprises (SMEs) are struggling most with the skills shortage. 

“They can’t find the technicians and engineers that they need,” Lee says. “These companies can’t find skilled people because there are a lot of people coming out of good but second-rate universities who don’t have any concrete, tangible skills.”

The situation had reached a point that the government even introduced Swiss-style apprenticeship programmes (a split part-study, part-work model) for university graduates who are unable to find jobs – so as to equip them with some tangible competencies.

Still, Evans believes more needs to be done to truly solve the root of the issue.

South Korea is ranked 46th out of 118 countries in the Global Competitiveness Talent Index, with the lack of skilled talent the major driver behind its middling result.

And herein lies another paradox. While the East Asian country is among the top five nations in the world in terms of information technology-readiness and usage, it lacks technology talent in particular. The Global Competitiveness Talent Index found the country’s base skills were lower than those of countries that do not share its technological sophistication, including Malaysia, Australia, and New Zealand.

“It’s a great country that’s having difficulty adjusting to some of the deeper changes which digitalisation and automation are bringing about, because a lot of its people don’t have the skills for this ‘Industry 4.0’ world,” says Evans.

Government should spearhead change

While GE’s Lee acknowledges the mismatch between graduates’ majors and the relevant job skills required, she insists the lack of technical skills is not the biggest problem, noting that staff of all levels “actually learn more on-the-job”.

She says almost 40% of university graduates undertook engineering or science degrees in 2016, which is a “healthy-enough” indicator to show that Koreans do value skills training, and not just reputable paper qualifications.

Furthermore, most university students undertake double degrees and include business administration as one of their majors.

“When I interview those graduates, I don’t see a lack of business acumen,” says Lee.

Graduates also have the option of working as independent contractors and accumulating work experience in that way, she adds.

Of course, Lee says there is always more that could be done to soften graduates’ entries into the job market. Internships are one potential avenue.

She says companies themselves should work closer with the universities (with the help of the government) to provide single-semester internship programmes for students.

“In Europe, the governments provided support and eased the company’s liabilities to accommodate students and interns. In Korea, there’s no such governmental support or special programme right now,” she says.

But with a new President and a government that has laid out employment policies as one of its key priorities, Lee is hopeful that things will get better for young jobseekers in South Korea.

Evans, however, says it’s too early to tell, cautioning that the South Korean government, up until President Park’s administration, had only done “some small reforms” since 2002.

“They haven’t really tackled the fundamental problems of an education system which was well-suited for the machine-factory age of the 20th century, but ill-adapted for the fast moving, highly-competitive age of ‘Industry 4.0’,” he says.

The long-term solution, he believes, lies in changing a culture that “kills individual creativity” and will have to start with the attitudes of families who are reluctant to send their children to vocational training schools that “don’t have as good resources”.

“They need to rethink the education system – make it harder to get into universities; and make it more attractive to go to technical schools."

The second part of HRM Magazine's HR Country Report on South Korea looks at plans to eradicate the practice of hiring based on looks. Read it here.

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