[Op-Ed] A Higher Youth Employment Rate Strengthens National Competitiveness

Korea Needs Greater Flexibility in Its Rigid Labor Market

France Reduced the Burden on Firms by Easing Dismissal Requirements and Streamlining Labor Unions

Germany Carried Out the Hartz Reforms to Draw the Long-Term Unemployed into the Labor Market

Despite a declining youth population caused by low birthrates and aging, young people in Korea continue to face serious difficulty finding jobs. Last year, the youth employment rate was the only one among all age groups to decline, while the number of young people classified as “resting”—those neither seeking work nor participating in economic activity—surpassed 410,000. Korea can no longer afford to stand by and ignore the youth employment crisis.

To address youth unemployment, greater flexibility in the rigid labor market is needed. University students identified the main causes of youth employment difficulties as the “decline in quality jobs” and the “reduction in entry-level hiring opportunities due to a preference for experienced workers.” In pursuit of economic independence, young people are crowding into non-regular jobs while enduring low wages and unstable working conditions. This is widening the wage gap between regular and non-regular workers and creating a vicious cycle in the rigid labor market that deepens social inequality.

French President Macron improved labor market flexibility through six years of labor reform. Macron reduced the burden on businesses by easing dismissal requirements and streamlining labor unions, while retaining investment that might otherwise have flowed abroad through the abolition of the wealth tax and cuts in income tax. He also carried out structural labor market reforms to reduce discrimination between regular and non-regular workers. As the labor market became more flexible, French companies created more quality jobs than before.

Germany’s labor reforms also deserve close attention. The Schröder and Merkel governments carried out the Hartz reforms to draw the long-term unemployed into the labor market. Germany improved labor market flexibility by easing excessive regulations protecting regular workers and expanding flexibility in working hours. It is currently striving to dramatically improve employment services such as job placement and vocational training.

An increase in the youth employment rate means stronger national competitiveness. Young people are a key human resource responsible for the country’s future. Only when they secure more jobs and participate more actively in the economy can labor market stability and corporate productivity increase. To make this possible, companies must provide more quality jobs.

Korea needs to reduce the burden on businesses through properly directed labor reform and regulatory deregulation, while building the infrastructure needed to encourage active investment and job creation. The youth employment rate is more than just a number; it is an important indicator of a country’s economic and social stability. To achieve sustainable growth in employment, building a flexible labor market is indispensable.

Suhwa Jung

Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] 청년 고용률이 높아야 국가 경쟁력 강화된다

Author: Su-hwa Jeong

Date: 2024-04-08

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=26551