High youth joblessness explains Korea ruling party setback

[SEOUL] Unemployment data released Friday following South Korea's election underscore a key source of voter frustration that culminated in the rout suffered by President Park Geun Hye's Saenuri party.

While overall unemployment fell to 3.8 per cent in March, according to figures from Statistics Korea, the jobless rate for workers ages 15 to 29 remained persistently high at 11.8 per cent, just shy of February's record.

Another worsening aspect of South Korea's employment picture is the growing number of discouraged workers, or those who have given up seeking jobs - and aren't counted in the jobless rate. That number reached 431,000 in March, up about 3,000 from a year earlier.

One of the main reasons analysts gave for Wednesday's setback for Ms Park's ruling Saenuri Party, which won 122 seats in the 300-seat National Assembly after projections showed it would secure at least a majority, was the stubbornly high rate of joblessness among young people.

Poorer job prospects and slower economic growth are a burden for Ms Park, who is limited to one term - South Koreans will elect a new president at the end of 2017.

"The problem in Korea is that jobs for youth are mostly temporary, low-income positions, so young people continue job searching in hopes of entering bigger companies," which raises the unemployment rate, Lee Jun Hyup, a research fellow for Hyundai Research Institute in Seoul, said Friday after the data was released.

"The job market isn't flexible here and there isn't much chance to move on to a decent job if you start as a contract worker." While a shrinking work force is a concern in Korea with its rapidly aging population, the economy isn't producing enough jobs for the younger generation as companies try to keep older workers.

As a sign of the lack of jobs, more than 220,000 graduates applied for civil-service jobs since late January, pushing the jobless rate to a record high in February.

"Everyone is trying to grab the very few number of good jobs offered by big companies or wants to become a civil servant. Obviously, not everyone can do that," said Jeong Myung Hwa, 29, who is on her fourth temporary contract at a marketing company in Seoul.

She voted for the People's Party led by Ahn Cheol Soo, saying that she was disappointed with both Ms Park's ruling party and the main opposition party. "I wanted to be a journalist but stopped looking, it was just too hard," she said.

A survey released April 6 by SaraminHR Co, a job agency, shows that 46 per cent of 496 job seekers have debt to pay off, including from student loans.

More than 55 per cent of a pool of 907 job seekers said they are willing to take temporary positions in a survey conducted in March, up 6.7 percentage points from a year earlier.

"Big companies may be still hiring, but small to medium-sized firms aren't hiring much," said Im Min Uk, head of public relations at SaraminHR. "Young people are angry because experiencing such failures hurts their self-esteem, and there is nobody to blame."

BLOOMBERG