Young South Koreans shun SMEs despite high youth unemployment

A seismic change is evident in South Korea’s SME landscape as young employees dwindle and older generations take centre stage.
By: | April 24, 2024

Despite a persistently high youth unemployment rate of 45.9%, a recent decline from 46.2%, young South Koreans are reluctant to enter the small and medium-sized enterprise (SME) workforce, according to data from Statistics Korea.

The data revealed a generational shift within the SME workforce. In 2023, only 30.9%, or 7.81 million, of all SME employees were in their 20s and 30s. This figure has been declining from a high of 47.7% in 2003. Conversely, the proportion of older employees in SMEs has risen. Currently, those in their 60s and older make up nearly half (24%) of the SME workforce, followed by employees in their 50s (23.8%) and 40s (21.3%).

“The older they are, the more they are likely to work for SMEs,” commented an official at Statistics Korea. Analysts attributed this shift to various factors, such as the declining birthrate and an ageing population, contributing to a scarcity of younger talent in the job market.

Additionally, preferences among young employees for higher-paying positions and more favourable working conditions at larger organisations play a significant role. Statistics Korea’s data highlighted that in 2023, nearly half (46.6%) of all employees in conglomerates were in their 20s and 30s, with only 31.8% opting for SME employment.

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This disparity is further amplified by wage data. Employees in larger organisations earned an average of 5.91 million won (US$4,280) per month in 2022, more than double the average earnings of 2.86 million won (US$2,075) in SMEs. Moreover, the availability of benefits such as childcare leave favours employees of large organisations, with only half (50.8%) of SMEs employing 10 to 29 employees reporting limited access to such benefits compared to over 95% in larger organisations.  

Consequently, many young South Koreans delay their job search or remain outside the workforce altogether, with over 600,000 individuals in their 20s and 30s neither employed nor actively seeking employment, reported The Korea Times.