AI Accelerates Youth Unemployment... Share of New Hires Who Are Young Falls Below 30%

BOK Report "Is the Contraction of Youth Employment Due to AI?"

94% of Youth Jobs Lost in High AI-Exposure Industries

Companies Shrink New Hiring, Existing Workers Also Leaving

Career Ladders Disrupted... "Shift Needed to Talent Development Policies"

The Bank of Korea has analyzed that, as the adoption of artificial intelligence (AI) accelerates companies’ preference for experienced hires, the number of entry-level jobs is rapidly declining. Among newly employed workers, the proportion of youth (aged 15–29) has fallen below 30% in the past two years, and the attrition rate among existing young workers has also risen. This trend is particularly pronounced in professional fields that require higher education, such as university degrees, as AI is quickly replacing entry-level work such as data organization and document preparation, which were previously handled by new hires. As a result, there are calls for employment policy to be revamped to better support young people in building their career ladders in the AI era.

Corporate AI Adoption Striking a Blow to the Youth Job Market… Hiring Barriers Rise and Job Losses Increase

Students at a university library in downtown Seoul are sacrificing their vacation and working hard to prepare for employment. Photo by Moon Honam

According to the 'BOK Issue Note: Is the Contraction of Youth Employment Due to AI? The Changing Career Ladder and Policy Response' released by the Bank of Korea on August 18, the share of youth in the new hiring market has fallen sharply over the past two years. The average share before the pandemic (2014–2019) was 36.9%, but this dropped to 29.3% in the most recent period (2024–2026). The Bank of Korea noted that, although the rapid spread of AI has not led to significant changes in most major employment indicators, the decline in the proportion of young workers is a particularly distinct trend.

This phenomenon was even more pronounced in industries with a high degree of AI exposure (“high-exposure industries”). According to an analysis by the Bank of Korea’s employment research team, which used National Pension Service data and the Economically Active Population Survey, youth employment fell by 285,000 jobs over the past four years (July 2022 – June 2026), of which 94% (268,000) were in high AI-exposure industries. This stands in contrast to the 230,000 jobs gained by those in their 50s during the same period, 173,000 of which were in high AI-exposure industries.

The narrowing of entry-level job opportunities has also affected youth unemployment rates. The impact was especially severe for highly educated young people, such as university graduates. Previously, the unemployment rate of four-year college graduates was similar to that of youth with an associate degree or less. However, since the introduction of generative AI, the unemployment rate for four-year college graduates has increased to 7.0%, now 1.6 percentage points higher than that for those with an associate degree or less (5.4%). This is believed to be due to college graduates being more concentrated in industries with high AI exposure. Oh Samil, head of the Bank of Korea’s employment research team, commented, “As generative AI began to preferentially replace the cognitive and analytical work usually performed by college graduates, the employment conditions of highly educated young people have worsened comparatively.”

The spread of AI also appears to be accelerating the attrition rate among existing young workers. In AI high-exposure industries, the number of young people who lost their jobs rose from 37,000 during 2016–2019 to 49,000 in the past four years, an increase of about 32%. Oh added, “This indicates that the process by which young people accumulate experience and skills through continued employment is weakening.”

Employment Policy Must Change in the AI Era: From Simple Hiring Support to Career Ladder Redesign

While it is true that the introduction of AI is rapidly encroaching on entry-level work within professional fields requiring higher education and accelerating the youth employment downturn, the Bank of Korea researchers stressed that recent difficulties in youth employment should not be attributed to AI alone.

Oh noted, “Some view this as a normalization following excessive hiring after the pandemic and the spread of remote work. There has also long been a preference for experienced hires, while in-house training programs have weakened and career ladders have been disrupted. The reasonable perspective is that changes in traditional hiring and work methods were already underway and have simply been accelerated by AI.”

The Bank of Korea also pointed out that it is uncertain whether the contraction of youth employment will continue as AI adoption spreads. Oh said, “Since young people are the most frequent users of AI and have the highest adaptability, they could become the main beneficiaries of productivity gains and the creation of new jobs in the long term. Also, it is questionable whether companies will continue to undermine their talent pipelines just for short-term cost savings.” He suggested that companies are likely to focus instead on nurturing talent able to collaborate with AI, establishing AI collaboration systems, and pursuing organizational change through job redesign.

There is also a need to shift government employment policy. Oh emphasized that, rather than simply trying to preserve entry-level jobs quickly being replaced by AI, support should be centered on helping young people redesign their career ladders in tandem with AI. “Instead of hiring subsidies, it is necessary to support talent development costs,” he proposed, calling for the creation of job training programs fit for the AI era and the expansion of support to professional training and mentoring in companies, as part of a new 'career development subsidy' framework.

He added that, in the mid- to long-term, it is also important to reconsider the overall direction of AI adoption and to reflect on ensuring tax neutrality for investments in human capital. Oh explained, “There are many tax benefits and other incentives for technology investment, but we need to question whether it is desirable to encourage excessive automation that simply replaces workers without significant productivity effect, and to consider how society values talent development and whether policy incentives are balanced between technology and talent investment.”

According to the Bank of Korea’s research, industries where a larger portion of work is automated by AI saw greater declines in youth employment, whereas industries where AI was used in an “augmenting” manner to assist human work experienced more limited reductions. Oh pointed out, “This suggests that the future impact on employment will depend not just on AI adoption itself, but on how it is utilized.”

This content was produced with the assistance of AI translation services.