If young people's employment is delayed by one year, their real wages fall 6.7%, and the probability of being hired as regular employees also decreases, according to an analysis by the Bank of Korea.
On the 19th, the Bank of Korea (BOK) published a report titled "An assessment of the lifetime impact of delayed labor market entry and housing cost burdens among the young generation." The report was written by Lee Jae-ho, deputy head of the macroanalysis team in the BOK's Research Department.
According to the research team, as corporations have recently favored experienced hires and expanded rolling recruitment, the job search period for young people has been getting longer. According to DataCheo, the share of young people who took more than one year to land their first job rose from 24.1% in 2004 to 31.3% last year.
The extended job search period also negatively affected young people's wages and employment types. When the Bank of Korea (BOK) examined workers' wages, it found that for every additional year it took to find a job, current real wages fell 6.7%. It also found that when the period of unemployment was one year, the probability of working as a regular employee five years later was 66.1%, but if it increased to three years, the probability fell to 56.2%.
The research team noted that as the economic activity of young people is delayed, their housing conditions are also deteriorating. According to the housing conditions survey by the Ministry of Land, Infrastructure and Transport, the share of young people living in vulnerable environments such as gosiwon surged from 5.6% in 2010 to 11.5% in 2023. The share of young people living in spaces smaller than 14㎡, the minimum residential area needed for a healthy life, rose from 6.1% in 2023 to 8.2% in 2024.
The research team said that higher housing costs can increase young people's liability and become a factor preventing long-term asset building. The research found that a 1% rise in housing costs leads to a 0.04% decrease in total asset. In addition, when the share of housing cost expenditure rises by 1 percentage point, the share of education costs falls by 0.18 percentage point, suggesting a high likelihood that young people's capacity for future investment will be constrained.
The research team said, "The employment and housing issues of the young generation are not personal problems of young people but structural problems that constrain the growth of Korea," adding, "On the employment side, easing labor market rigidity to improve the dual structure, and on the housing side, resolving supply-demand imbalances by expanding the supply of small housing units are more fundamental solutions."