[Free Speech Forum] Youth Economic Misery Index Hits Record High... Time for Real Solutions

Young people’s economic misery index has reached an all-time high. Not only is it the highest since records began, it is also the highest among all age groups. With persistent job shortages, mounting debt, and continued high inflation, young people are feeling frustrated in every aspect of their economic lives.

The worsening employment freeze this year has driven young people’s economic misery index to its worst level ever. Last month, the unemployment rate for young people aged 15 to 29 stood at 5.6%, a level more severe than during the 1999 foreign exchange crisis. As the job drought shows no sign of ending, the reality young people face is bleak.

Amid the harsh employment downturn, the pace of increase in household debt among young people has been extremely rapid. Youth debt rose by an annual average of 18.5%, from 14.91 million won in 2015 to 34.79 million won in 2020, while assets increased by only 3.9% annually on average, from 88.64 million won to 107.2 million won. Compared with all other age groups as well, the pace of debt growth among young people is far faster than the pace of asset growth.

The government has poured a great deal of money into the job budget to address youth unemployment. It invested a total of 33.1 trillion won and created 1,297,000 direct jobs, but only 3 out of 10 of those jobs are sustained. Government-created public jobs funded by tax money have clear limitations. Their effect on creating new employment is minimal, and as a result they fail to serve as a catalyst for private-sector hiring.

The fundamental reason the quality of employment has not improved is the rigidity of Korea’s labor market, one of the worst in the world. To resolve this, it is necessary to correct labor-management relations that are tilted toward unions. Due to the excessive protection of labor rights, employers’ right to respond to unions is weak, and unfair labor practices are regulated in a way that targets only employers unilaterally. If anti-business, pro-union policies continue, businesses will shrink, and the high-quality jobs young people want will disappear. To create good jobs for young people, it is necessary to stop militant unions from exercising vested interests and to establish balance in labor-management relations.

Along with labor reform, anti-business regulations must be dismantled in order to create high-quality jobs. The web of regulations that obstruct business growth and innovation continually worsens the investment environment for firms. When the investment environment deteriorates, jobs inevitably decline. Laws that tie the hands and feet of businesses, such as the three major business regulatory acts and union-related laws, must be revised.

Only when an environment favorable to business is created can high-quality jobs be generated. Truly helping young people is not about handing them a little money, but about changing the system so they can participate in economic activity. To achieve this, it is necessary to restore balance in labor-management relations, dismantle business regulations, and increase labor market flexibility.

Minkyung Jeon, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [자유발언대] 청년 경제 고통지수 '사상 최고' ... 이젠 진짜 해결책이 필요할 때

Author: Min-gyeong Jeon

Date: 2021-12-31

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=9&idx=24485