With COVID-19 blocking all airways, 260 travel agencies have reported business closures, so 2 agencies or more are shuttering per day.
The IMF has warned that the world faces the worst recession since the Great Depression, and many around the globe are bracing for an employment crisis.
Although existing jobs are also at risk, the biggest impact is expected to be felt by the youth population who are preparing to enter the labor market.
So, how much will the spread of coronavirus affect youth employment?
To find out, KDI examined the conditions before and after COVID-19.
The official statistics shows that the youth employment rate was on an upward trend before the pandemic.
But, due to the significantly low teen employment rate, another analysis was conducted which controlled the population composition to assess whether the growth in youth employment was driven by a decreasing teen population and an increasing over-20 population during the past 5 years.
The results found that the youth employment rate was, in fact, falling until September of 2019.
The service industry saw a decline in youth employment as the number of Chinese tourists dropped sharply at the end of 2016 as did the manufacturing industry due to its restructuring.
The extension of the retirement age also had a negative impact on youth employment
Improvements were observed from October 2019 in services, thanks to the growing domestic consumption of services and increasing number of foreign tourists, and also in manufacturing.
There was also a downturn in the unemployment rate during the same year.
But, this was significantly affected by the surge in the economically inactive youth population. In particular, the number of young people who gave up their job seeking activities increased, with many choosing to return to school or to rest.
After exhibiting an upswing, the youth employment rate reversed back down from February, and exacerbated in March.
The implementation of social distancing measures delivered a huge blow to the service industry, especially to tourism and education related sectors, which were previously regaining momentum.
According to the Korean job search engine, Saramin, new job postings plunged 44.4%.
What is more, employment is expected to further contract across all industries as overseas demand shrinks on the global spread of COVID-19.
In fact, overseas factors were the main drivers of Korea’s falling employment rate during the global financial crisis.
Youth employment fell by the biggest margin, and the recovery was slow.
Then, will the aftermath of COVID-19 stop at just delaying the employment of young people?
Our analysis finds that those whose entrance into the labor market is delayed by one year are paid 8% less during their first 10 years due to the loss of career opportunities.
Even if individuals manage to find jobs during the recession, if the conditions are bad, then their wages after ten years and future employment will both be affected.
(Interview with the author)
While many jobs are threatened in the wake of COVID-19, the issue of youth employment requires a special attention because the younger generations will be the supporters of our aging society.
Even if the coronavirus crisis is short-lived, it could take a considerable length of time for hirings to recover. Therefore, support policies such as subsidies to promote employment must be expanded to bolster new recruitment activities.
In preparation for a prolonged recession, workers for the health and IT industries should be fostered and education should be reformed accordingly.
Meanwhile, countermeasures must be put into place to prevent youths who are unable to find employment from falling through the cracks of social safety nets.
■ Youth employment deserves more attention in times of crisis, particularly in a rapidly aging society.
■ The current economic crisis, which is caused by restrictions on face-to-face interaction and movements, is different from previous economic crises; also, the effects of employment policies may differ from those in the past.
■ While active discussions are now underway to expand social safety nets and reduce blind spots, additional measures are required for the young unemployed who have never been employed.
■ Even if the health crisis ends shortly in Korea, it will take a considerable amount of time to get employment back on track. Policies to create jobs for youth are needed.
■ If the health crisis does not end shortly, the economy is expected to undergo structural changes. The government needs to prepare longer-term measures such as new industrial policies and educational reforms.
Providing Economic Forecast and Macroeconomic Policy Direction, the Groundwork for a Brighter Future
The Department of Macroeconomics is conducting researches on the macro economy and macroeconomic policy, particularly focusing on suggesting the analysis of macroeconomic trends and current status of the economy at home and abroad, the economic forecast, and the policy direction of the macro economy. The Department is also in charge of establishing, sustaining and maintaining various econometric models, based on which it analyses policy effects and develops a long-term economic forecast.
Economic trend analysis, short- and long-term forecast
Policy study on macroeconomic management
Basic structural analysis on macroeconomic areas
Maintenance of multi-sectoral dynamic macroeconomic model
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