Labour market difficulties affecting youth
Korea has a remarkable record of expanding enrolments at the tertiary education level of education. Indeed, the number of students enrolled at this level has quadrupled during the past 25 years and almost two-thirds of persons between the ages of 25 and 34 now have a tertiary degree, while the OECD average is only a little above one-third (Figure 3.9). While these are remarkable achievements, there are reasons to believe that an economically costly mismatch had developed between the qualifications profile of recent school leavers and labour market requirements.
Concerns that an over-emphasis on higher education has become a problem in the Korean labour market appears to be borne out by statistics on the number of youth who are neither in employment nor in education or training, the so-called NEETs. Figure 3.19 shows that the share of NEETs among Korean youth with a tertiary education is about double the OECD average (25% versus 13%), while the rate among all youth is only moderately above average (19% versus 16%). By contrast, only 5% of the least educated out of school youth in Korea (i.e. those not having finished upper-secondary schooling) are neither employed nor in training, well below the OECD average of 16%. This pattern is consistent with the widespread perception that the Korean youth labour market is characterised by an over-supply of highly educated workers, with employers unable to offer all of the university graduates jobs which match their qualifications. It should be noted, however, that the NEET statistics tend to overstate the extent to which young adults in Korea are neither working nor studying, because some of the youth classified as NEET are taking courses equivalent to regular school education, such as private academic courses that serve as preparation for entry to certain jobs. This type of informal study is particularly common among youth with a tertiary degree. The Ministry of Employment and Labor estimates that a corrected NEET rate for this group would 15%, rather than the 25% shown in Figure 3.19.
The relatively high rate of NEETs among tertiary graduates, combined with the low incidence of non-regular employment among this group, suggests that educated youth in Korea prefer to stay out of the labour market rather than to accept non-regular jobs that do not meet their aspirations. This could reflect a correct perception that accepting a non-regular job would more strongly compromise their chances of later accessing a good job than remaining unemployed. The analysis of mobility patterns in Section 3.2 suggests that this is likely to be a correct perception in many cases.
Figure 3.19. International comparison of the share of youth neither in employment
nor in education or training
- a) Percentages of 15-29 year-olds who are NEET (neither in employment nor in education or training), relating to graduates of tertiary education in Panel A and to all school leavers in Panel B. A significant share of Korean youth who are classified as being NEET according to the OECD definition are engaged is some form of study. For example, data on the category ISCED 4, which captures programmes that straddle the boundary between upper secondary and post-secondary education, are not available in Korea and 11 other OECD countries. This category could potentially include persons in an apprenticeship or in training outside of school. The numbers in the chart therefore overestimate the number of youth who are inactive in these countries.
- b) Unweighted average of the countries shown on the chart, respectively for each panel.
- c) Information on data for Israel is available at: http://dx.doi.Org/10.1787/888932315602.
Source: OECD (2012), Education at a Glance 2012: OECD Indicators, OECD Publishing, http://dx.doi.org/10.1787/eag-2012-en;
and Statistics Korea, Economically Active Population Survey.
Figure 3.20 sheds further light on the nature of the skill mismatch in the youth labour market by documenting the labour market status of 2007 graduates of tertiary programmes. Recent graduates of colleges, that is, of professional universities, were significantly more likely to be employed than the graduates of general universities. Most employed graduates from both types of universities had regular employment, but significant minorities had non-regular employment, suggesting that the latter sometimes may serve as a stepping stone to better jobs. The NEET rates were twice as high for recent graduates of general universities as for graduates of colleges (27 and 18%, respectively). These differences strongly suggest that the mismatch in Korea is as much about too great a focus on academic subjects, as it is about too much education overall.
As was noted above, many of the non-employed youth with a general university education are preparing for job entrance exams in the public or private sector. This probably makes sense for many of them insofar as it maximises their chances of obtaining a good economic return on the large investments they have made in obtaining an advanced education. However, this form of study may be largely a zero-sum competition from the point of view of society. There would be large efficiency gains if policies could be found to either expand the number of jobs that make productive use of workers with degrees from a general university or adjust schooling patterns, so as to bring education supply into better balance with the demand for workers with different qualifications.
Figure 3.20. Employment outcomes for university graduates in 2007
a) Includes those continuing to advanced studies and men fulfilling their military service obligation. Source: Ministry of Education, Science and Technology.