By: Donghee Lee

The problem of youth unemployment has recently become one of the hottest issues in the South Korean economy. The unemployment rate of the youth, those aged 15 to 29, hit 9.0% in 2014, which is the highest on record since the Asian financial crisis in 1997. This raises concern because while the unemployment rate for all ages fell 0.2%p during 2010~2014, the youth unemployment rate rose 1.0%p in the same period. In addition, the Korean employment rate for youth (41%) was the lowest among major OECD countries such as the UK (61%), Germany (58%), the US (57%), Japan (55%), and France (44%) in 2014.

An employment conflict between age groups has also been visible according to the aging phenomenon of the population due to the extension of the average life span. Since 1995, the number of South Korean young workers (15 to 29 years old) has decreased by 1.57 million people as shown in Figure 1. On the other hand, the number of workers aged over 50 years old has increased by about 4.87 million people, and their share has significantly increased from 21.9% to 36.5% of the total number of employed persons.

While the mandatory retirement age of workers is over 60 years old in 2016, the issues that the recruitment of young people would be reduced and job competition between age groups would occur are being proposed. From this point of view, the need for empirical analysis is growing as to whether a job conflict occurs between the young people in seeking their first job after graduation and the old people in attempting re-employment after unemployment.

Currently, the South Korean government has been promoting the intensive development of the service industry as one of the most important national issues for realizing the “creative economy focusing on jobs”. South Korea’s service industry, since the 1990s, has been playing a buffer role of the unemployment problem due to the reduction of manufacturing employment. In recent years, the government has selected promising service industries with great potential for growth and a high job creation effect such as healthcare, tourism, content, education, finance, logistic and software in an effort to foster them. These seven promising service industries, which are preferred by Korean young employees, are expected to be part of the solution to reduce the youth unemployment.

In order to make a strategy for job creation in the Korean service industry by taking into account youth unemployment and increase in the elderly employment, it is necessary to specifically identify service industries in which employment of each age group is mainly concentrated and to investigate how they have changed. Furthermore, comparison with developed countries such as Japan, Germany, the UK, and France that have already experienced the aging population problem and the shift to service economy may help to objectively diagnose characteristics and problems of the Korean services industry from the aspect of employment age.

Amid this background, this paper carries out an international comparison of the age distribution of workers by service industry, focusing on the seven promising service industries by the South Korean government. In particular, the degree of job competition between the aging elderly and the young in service industries is analyzed by country and then compared with one another. The main service industries and change patterns in employment for each age group are also examined.

Sources: @PapersSSRN