As highlighted in the OECD Action Plan for Youth, successful engagement of young people in the labour market is crucial not only for their own personal economic prospects and well-being, but also for overall economic growth and social cohesion. Therefore, investing in youth is a policy priority in all countries, including Korea, requiring concerted action to develop education systems and labour market arrangements that work well together.

A slowdown in economic growth is prolonging the transition from school to work for many young Koreans. The youth employment rate stands well below the OECD average and youth unemployment surpasses the OECD average since 2017. Rather than accepting a low-paid or temporary job in a highly segmented labour market, many young people prefer to continue investing in formal and informal education or spend a long time preparing for company entry exams. Korean youth are amongst the most educated and skilled in the OECD area, but the financial costs of education for the government and parents are high, as is the personal investment of young people in terms of time and energy devoted to studying. In addition, their skills do not always match labour market needs and many small and medium-sized enterprises struggle to fill positions as they are unable to offer the same working conditions as larger firms.

Korea’s economic growth record over the past half century has been outstanding, reaching on average 7.7% in the 1970s and ‘80s, boosted by sound macroeconomic policy, heavy investments in human and physical capital and a rapid expansion of the working-age population. Nevertheless, economy growth slowed down to 2.7% in 2018 and is projected to remain around 2.4-2.5% in 2019-20. Weaknesses in domestic demand and international trade are the main causes for the slowdown, but also population ageing and inefficiencies in the product and labour markets play a role. Future growth prospects will depend on how well the country will master these challenges.

This chapter provides an overview of the educational, employment and well-being outcomes of young people in Korea. It first outlines Korea’s economic context. It then compares the educational and employment performance of young Koreans with that of young people across OECD countries, focusing on employment, unemployment and educational attainment. The chapter also describes the size and composition of the population of young people who are not in employment, education or training as well as employment quality and skill mismatches. The chapter concludes with information on the life satisfaction and poverty rates among young people.

This chapter analyses stages of young Koreans’ educational and labour market trajectories that can contribute to skill mismatches. It first provides an overview of Korean students’ choices concerning general and vocational education and discusses career guidance policies. In the following two parts, the chapter focuses on initiatives to strengthen the quality and labour market relevance of upper secondary vocational and tertiary education, respectively. Finally, it presents current practices and advantages of competency-based hiring.

This chapter looks at the policies and programmes that Korea has in place to support young people in a weakening labour market. The chapter starts by comparing labour market outcomes of youth with those of older generations, as well as with youth in other OECD countries. It then assesses the coverage and adequacy of the programmes and policies aimed at re-engaging young jobseekers in employment and at providing them with comprehensive income and housing support. The chapter finishes with a discussion on how to address labour market duality and facilitate access to rewarding employment.