The disparity between large and small companies is seen as a factor behind South Korea's youth employment difficulties, and the government has announced measures to revive youth employment. The focus is on how to address the dual structure of the labor market in light of practical-experience requirements for internships and the realities of new hiring.
The employment rate among graduates of higher education in South Korea fell to 53.8% in 2025, continuing its downward trend from 58.1% in 2023 and 55.7% in 2024. The overall employment rate for graduates is not high even when the total number of graduates is used as the denominator. Of the 314,622 graduates of four-year universities in 2025, 169,214 were employed.
Large companies are not hiring enough to meet job seekers' preferences. The 113 large companies hired approximately 92,700 new employees, fewer than half of whom were aged 30 or younger. Many of the new-hiring plans announced by the government for major business groups also focus on experienced workers, with limited recruitment of new graduates.
South Korea has also compared its youth employment problems with those of Japan. Although Japan has a higher employment rate among university graduates, its wage disparities and the role of SMEs differ. Annual salary levels at large Japanese companies are lower than in South Korea, but the wage gap between large companies and SMEs is smaller, and the employment rate among those seeking jobs also tends to be higher.
On 28 August, the government announced youth employment recovery measures and outlined plans to train more than 300,000 specialized workers in growth fields such as AI and semiconductors, as well as establish a new matching platform linking young people with companies. The youth employment-related budget is expected to increase to ¥3.3 trillion in the FY2027 budget, strengthening job creation and support.
Current challenges include improving the dual structure of the labor market, raising productivity at SMEs, and strengthening the bargaining power of subcontracting SMEs. The spread of AI also creates a risk that new hiring will be curbed, and policy needs to address these issues comprehensively.