The Bank of Korea has published an assessment finding that weakness in youth employment is increasingly reflected in deteriorating job quality rather than unemployment alone. Growth concentrated in information technology (IT) manufacturing is generating insufficient permanent hiring, while artificial intelligence (AI) adoption appears to be reinforcing employers’ preference for experienced workers. Barriers to entering stable employment and moving between jobs mean an economic recovery alone is unlikely to resolve the weakness quickly. The seasonally adjusted employment rate for people aged 15–29 fell from 46.6% in 2022 to 43.7% in January–September 2026, while their unemployment rate rose from 6.4% to 6.6%. Although these indicators remain more favorable than during the 2014–19 downturn, job quality has deteriorated more sharply. A growing share of young workers holds temporary or daily jobs, suggesting that more are accepting less secure employment rather than waiting for better opportunities. IT manufacturing has driven output growth but created relatively few permanent positions, while weaker activity in other manufacturing industries and services has reduced hiring. In occupations with high AI exposure, automation of basic tasks appears to be further narrowing opportunities for new entrants. Declining mobility from the less secure secondary labor market into the better paid, more secure primary market risks prolonging the downturn by limiting opportunities to accumulate relevant skills. Policies focused only on labor supply cannot address these structural constraints. Recommended industrial measures include stronger links between IT manufacturing, related industries and domestic demand so that growth generates employment more broadly. Education and practical AI training should align more closely with employers’ needs. Labor reforms should reduce turnover costs and institutional entry barriers through more flexible employment contracts and pay linked to job responsibilities and performance, alongside support that helps workers build and demonstrate relevant experience.
Bank of Korea links worsening youth job quality to industrial shifts, artificial intelligence and labor market rigidities
The Bank of Korea’s assessment finds that declining job quality reveals youth employment weakness more clearly than headline unemployment figures. Growth concentrated in IT manufacturing creates relatively few permanent jobs, while artificial intelligence appears to favor experienced hires and limited mobility restricts access to more secure work. Recommended responses combine broader employment gains from industrial growth, education aligned with hiring needs and reforms to employment contracts and wage setting.