After Three Years at an SME, Hoping for a 'Big Company Jump'... But the Odds of Being Unemployed Are 2.4 Times Higher [Youth at the Crossroads of Employment]

NABO Analyzes Initial Labor Market Transitions of Young People
Clear Gap Depending on Size and Type of First Job
"SME Work Experience Must Be Properly Valued in the Labor Market"

A recent analysis found that young employees who start their careers at small and medium-sized enterprises (SMEs) are more than twice as likely to fall into unemployment after three years than to move up to jobs at large companies. Amid a persistent youth employment freeze, there are concerns that SME jobs are failing to serve as a stable springboard for young people’s career development.

Yonhap News Agency

Upward Mobility at 4.7% vs. Unemployment at 11.4%... Weak Employment Retention at SMEs

According to the August issue of the 'NABO Population·Employment Trends & Issues' released on August 25 by Baek Kihong, Economic Analyst at the National Assembly Budget Office, there is a clear disparity in young people’s initial labor market pathways based on the size and employment type of their first employer.

The most notable finding is the fragile employment retention among those starting at SMEs and the limits of upward mobility. Three years after entering their first job, only 4.7% of those who started at an SME had successfully moved up to a large company or the public sector. By contrast, in the same period, 11.4% lost their jobs and fell into unemployment, more than double the upward mobility rate. The retention rate for the first job after three years was also striking: 68.9% for those who started at large companies and public sector jobs, but only 59.2% among SME starters, revealing their relative vulnerability in maintaining employment.

For Some, a Stepping Stone to Full-Time Jobs or Large Companies... but 1 in 3 Remain Non-Regular Workers

However, a closer look at just those who changed jobs reveals that experience as a non-regular worker at an SME can serve as a meaningful stepping stone to better opportunities. Among those who started as non-regular workers at SMEs and switched jobs, 44.2% moved into full-time SME positions, thereby increasing employment stability. Notably, the proportion who moved on to large companies or the public sector was 17.6%—higher than the 14.4% rate for those who started as full-time SME employees.

Nevertheless, there remained a dual trap of employment instability. Whether at SMEs or large companies, those who initially started as non-regular workers were structurally more likely to end up in another non-regular job compared to those who started as regular workers. In fact, 32.1% of young people who began as non-regular SME employees continued to be in non-regular SME jobs three years later.

27 Months of Declining Employment Rate... Urgent Need for a Genuine 'Career Ladder'

When these issues of employment instability and job mismatch combine, the youth employment crisis becomes even more severe. As of July, the youth (aged 15–29) employment rate stood at 44.2%, marking the 27th consecutive month of decline since May 2024, compared to the same month the previous year. Particularly striking, the number of young people classified as "resting"—not seeking employment at all—reached 367,000 (9.0%), indicating a rapid acceleration in labor market withdrawal.

The report stressed that in order to encourage youth employment at SMEs and prevent their exit from the labor market, it is essential to go beyond current improvements in working conditions and provide clear "career prospects" after employment. It called for urgent policy efforts to build a genuine "career ladder" in which the work experience gained at SMEs is properly recognized and utilized in the labor market. Recommended measures included: ▲ strengthening systems for recognizing experience, such as a Job Skills Bank or integrated work history certificates issued by Employment 24; ▲ expanding pathways to ensure continued career development by improving SME onboarding and job fit; and ▲ enhancing employment continuity during contract termination or job transitions.

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