A student walks past the Job Plus Center at a university in Seoul on July 23.YONHAP
Korea added 108,000 jobs in the first half of the year, about half as many as last year. The state labor institute has even halved its forecast for the full year.
Youth employment has now fallen for 44 straight months, according to the Korea Labor Institute's assessment of the first half of 2026 and its outlook for the second half.
The slowdown came fast. Employment grew by 183,000 in the first quarter and by only 32,000 in the second. In May, the number of people in work fell by 40,000 from a year earlier.
The employment rate for people aged 15 to 64 began falling in May. In the first six months of the year, the number of unemployed rose by 30,000 and the number of people outside the labor force by 109,000. The employment rate slipped 0.1 percentage point to 62.5 percent and the unemployment rate rose 0.1 percentage point to 3.2 percent.
"Slowing growth in employment, rising unemployment and a wider exit from the labor market came together, so employment in the first half was weaker than last year," the Korea Labor Institute said.
Young people fared worst. The employment rate for people in their 20s fell 1.3 percentage points from a year earlier, the steepest drop of any age group. With 44 months of falling youth employment, the youth employment rate has now declined for 26 months in a row.
The damage is concentrated at the point of entry. The number of young workers with three months or less in their jobs dropped sharply, and the employment rate for new graduates fell further than the youth average.
Counseling booths line the 2026 Seoul Youth Policy Fair at Dongdaemun Design Plaza in central Seoul on July 10.YONHAP
Even graduates are stuck at the door. Employment rates among people in their 20s with junior college degrees or higher held at last year's level, but the number finding work fell. The institute reads that as more young people delaying graduation or sitting out the job hunt because the market has worsened.
Job quality weakened too. Growth in regular employment ran at a third of last year's pace, and in May the number of regular workers fell for the first time since December 1999.
Nonwage work went the other way. The self-employed and others outside wage work accounted for two-thirds of the total increase in employment over the half year, the first time they have driven job growth since the coronavirus pandemic.
Services added 300,000 jobs, but the gains sat in a narrow band of industries. Health and social welfare accounted for 242,000 of them, while professional, scientific and technical services shed 88,000. Public administration, wholesale and retail, and accommodation and food services all lost jobs.
Manufacturing lost 62,000. Output and exports rose, led by semiconductors, without translating into hiring. Chipmaking generates less than half as many jobs per unit of output as manufacturing as a whole, and much of the recent export growth reflects higher memory prices rather than higher volumes.
The institute now expects employment to grow by 103,000 over the year, down from the 210,000 it forecast previously, with 98,000 of that coming in the second half.
A person walks outside SK hynix headquarters in Icheon, Gyeonggi on July 29.YONHAP
The Korea Labor Institute estimates the employment rate for the year at 62.7 percent and the unemployment rate at 2.9 percent. Should the numbers hold true, the annual employment rate would fall for the first time in six years, since the pandemic outbreak year of 2020. A falling employment rate and a rising unemployment rate have coincided only four times since 2000, and this would be the fifth time that happened.
Faster growth will not necessarily help. The institute expects the economy to expand by around 3 percent this year but says the gains are too concentrated in semiconductors to move the labor market.
"It is not that employment has become insensitive to growth, but that the growth linked to employment is weak," the institute said. "Whether employment improves in the second half will depend on a real recovery in domestic demand and sectors beyond semiconductors, rather than on the overall growth rate."
External uncertainty from the war in the Middle East and weak private consumption were also cited as drags on the outlook.
The institute warned that a delayed start in the labor market can cost young people wages and career progression later. It called for wider work experience and vocational training programs, and for measures to encourage companies to hire.
BY PARK JONG-SUH [cho.yongjun1@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
