More university graduates are opting for completely unexpected life path after failing to land coveted jobs in major conglomerates. The main reason is that major business groups slashed 90,000 jobs last year alone.
According to Statistics Korea last week, 220,000 jobs were created last year, but openings in big conglomerates shrank by 90,000. Some 170,000 of the new jobs were created in new companies or through business expansion, but 260,000 positions were lost due to company closures or downsizing.
Big businesses are companies that make W40 billion to W150 billion and employ more than 300 workers (US$1=W1,089). Some 3,800 firms in Korea fit that category.
But the job situation has grown bleaker since 2015, when they still created 70,000 new jobs. The decline last year is partly due to a crisis in the shipbuilding and shipping industries as well as to cutbacks amid the corruption scandal that led to the ouster of President Park Geun-hye.
This means graduates' chances of landing a secure, high-paying job are dwindling. The average monthly salary in big businesses last year was W4.74 million, twice the average in small and mid-sized companies (W2.24 million). Last month, youth unemployment reached 8.6 percent, the highest level for that month in 18 years.
The development is driven by the decline of traditional manufacturing industries. The IT sector is booming, but that is less labor-intensive than traditional smokestack industries, and a growing number of businesses here move their factories abroad. Seong Jae-min at the Korea Labor Institute said, "Layoffs in shipbuilding last year caused jobs in big businesses to decline, while baby-boomers who were laid off at that time ended up opening their own businesses."
Last year, 140,000 jobs were slashed in manufacturing and 20,000 jobs were created in the restaurant and hospitality industries, which are typically the kind of business early retirees open.
Exports of bread-and-butter semiconductors continue to soar, but this is having only a minimal effect on job growth. Samsung invested W13 trillion into its semiconductor business last year but hired only 650 new people, and SK Hynix invested W6 trillion but hired only 250 graduates.
Faced with slowing top-line growth, big businesses are cutting costs and minimizing new hires. Last year, 182 listed companies that generate more than W1 trillion in annual revenues hired just over a million workers, down 15,000 compared to 2015. From 2015 to 2016, big businesses' combined revenues grew W8.3 trillion and operating profit rose W6.5 trillion, but they still cut back on new hires.
More businesses are shifting their factories overseas to avoid high labor costs and militant unions at home. Samsung's overseas hires rose from 240,000 in 2012 to 330,000 in 2015, but at home it hired only 93,200 workers, down 3.8 percent compared to 2015 and the third year of decline.
The IT boom and factory automation are also hurting job growth. Banking is a prime example. Last year, 175 bank branches were closed and another 285 are scheduled to shut down this year as business moves online.