Youth Unemployment Worsens

Unemployment among young Koreans has soared to levels last seen during the 1997 Asian financial crisis, and the situation in the southeastern city of Ulsan provides a grim example.

Ulsan is a sprawling industrial city that is home to several major factories by Hyundai Motor, Hyundai Heavy Industries and SK Energy as well as hundreds of subcontractors.

Unemployment among young people there stands at a staggering 34.1 percent, and that is still 6.5 percentage points lower than the national average of 40.6 percent and the lowest among the country’s seven major cities.

Until 2010, Ulsan ranked third after Seoul and Incheon when it came to job opportunities for young people.

◆ Microcosm of Nationwide Malaise

Hyundai's plant, which is one of the largest in Ulsan, is no longer hiring. According to the Labor Ministry, 90.4 percent of the 3,138 workers hired by the plant were already working on contracts, and their status was merely changed to full-time employees. The remaining 9.6 percent were skilled workers with years of experience.

As a result the average age of workers is steadily rising. The average age of assembly-line workers was 38 in 2000 but now stands at 47, and the average employment period rose from 13 to 19 years.

Hyundai Heavy and SK Energy have also stopped hiring due to the prolonged downturn in the shipbuilding industry and falling oil prices.

Ulsan is home to high-paying manufacturing jobs in the major factories and low-paying work for small and mid-sized suppliers. Subcontractor staff make just a quarter of the average W100 million (US$1=W1,120) wage of Hyundai Motor workers.

In the second half of last year, even small and mid-sized factories stopped looking for new workers as orders from Hyundai and other big players slowed.

Yoo Han-bong at the Labor Ministry said, "Business has worsened among manufacturing companies in Ulsan and this has caused the region's entire economy to slow as well. Jobs available to young people have dried up."

Kim Yong-hee at the Ulsan Education Office said, "Five out of 10 high school students in Ulsan go to university because their parents earn good money working for Hyundai Motor or Hyundai Heavy, but these high levels of education then cause them to aim too high and look for positions that are getting scarcer in the region."

◆ Worse than Asian Financial Crisis

 According to the Bank of Korea, nationwide employment fell from 45 percent in 2004 to 40.7 percent last year. Youth unemployment now is similar to the 1997 Asian financial crisis, and the situation is showing no signs of improvement.

"During the Asian financial crisis, youth unemployment gradually improved over a two to three-year period," Cho Bum-joon at the BOK said. "But now there’s been no improvement since 2005."