South Korea flooded with more college graduates than the economy can absorb
Published The Straits Times, 13 Sep 2012
SEOUL - Ms Kim Hye Min boasts a 4.0 grade-point average at one of South Korea's top colleges, a perfect score in English proficiency and internships at Samsung Card and AT Kearney. But all her 20 job applications were rejected.
"A degree from a good university used to guarantee a spot at least at a top 10 company, but that was when a college degree actually meant something," said Ms Kim, 25.
"I studied hard and did everything right, but there are too many of us who did."
With almost three out of four high school students going to college in an effort to get a top-paying job in one of the leading industrial groups, known as chaebols, South Korea is being flooded with more college graduates than it needs.
Its 30 biggest companies hired 260,000 of them last year, leaving another 60,000 to swell the youth unemployment rate to 6.4 per cent last month, more than twice the national average.
"This is the price South Korea is paying for its education fervour and social pressure on everyone to want the same jobs," said Yonsei University professor Sung Tae Yoon.
"The problem is not the lack of jobs. It's the lack of quality employment and the lack of flexibility among job seekers to consider options beyond the conglomerates."
Many rejected applicants do not even show up in official jobless numbers. One-quarter of all college graduates under the age of 30 are classified as "Neets" - not in education, employment or training - and are excluded from unemployment data.
Hyundai Research Institute fellow Lee Joon Hyup estimates that the real youth jobless rate - for those between 15 and 29 - is as high as 22 per cent. That compares with a rate of 0.8 per cent in Singapore for 15- to 24-year olds in June last year.
"Reckless university enrolment has aggravated both the private education burden and youth unemployment," President Lee said last month during a visit to a job fair in Seoul. "It's a huge loss, not just for households but the whole country."
Mr Lee, himself a vocational school graduate, attributes youth unemployment to the entrenched competition for academic credentials and has introduced policies to encourage young people to skip college and "work first, study later".
To persuade companies to hire high school graduates, the government in September last year started offering companies tax incentives of up to 20 million won (S$21,800) for each one they employ.
Career counselling services and job fairs help teenagers explore options other than college.
The results are beginning to show. Banks nearly tripled the number of high school graduate recruits in the first half of the year compared with the same period last year. Government-controlled Woori Bank, Korea Development Bank and Industrial Bank of Korea doubled their hiring quota for the same group.
But Federation of Korean Industries official An Jong Hyun said the surplus of college graduates was a structural problem in Korean society that needed a comprehensive set of policies to resolve.
"The battle for a handful of jobs at top companies is a result of South Korea's unhealthy, decades-long reliance on chaebols," said Soongsil Cyber University professor Moon Keun Chan.
"The chaebols found a way to generate profit without hiring many people by monopolising business opportunities, giving no chance for small businesses to grow."