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"

According to an analysis, young people who begin their careers at small and medium-sized enterprises (SMEs) are more than twice as likely to end up unemployed three years later as they are to move to large companies. Amid ongoing headwinds for youth employment, there are concerns that SME jobs are failing to serve as a stable starting point for young people’s career development.

Yonhap News Agency

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

On August 25, Baek Kihong, Economic Analyst at the National Assembly Budget Office, reported in the August issue of ‘NABO Demographic & Employment Trends & Issues’ that the initial career paths of young people in the labor market differ significantly depending on the size of their first employer and their employment status.

The most notable finding is the weak job retention and limited upward mobility for those starting at SMEs. Only 4.7% of SME entrants succeeded in what is called “upward mobility”—transferring to a large corporation or the public sector—three years after landing their first job. In contrast, 11.4% lost their jobs and became unemployed during the same period, more than double the rate of upward movement. Even when it comes to staying with their original employer, 68.9% of those who started at a large corporation or public institution remained after three years, compared to only 59.2% of SME starters, further highlighting the relatively weak job retention among the latter group.

Stepping Stone to Regular Employment or Major Companies... But 1 in 3 Remain Non-Regular Workers

However, focusing only on those who changed jobs, the analysis did reveal that experience as a non-regular worker at an SME sometimes served as a stepping stone to a better position. Among those who started as non-regular employees at SMEs and changed jobs, 44.2% moved to regular positions within SMEs, improving their employment stability. Notably, 17.6% of these individuals moved to large corporations or the public sector, even surpassing the upward mobility rate of those who began as regular employees at SMEs (14.4%).

Nonetheless, there were also dual risks of falling into a cycle of employment instability. Whether at an SME or a large corporation, those who started as non-regular workers were structurally more likely to move to another non-regular position than those who began in regular jobs. In fact, 32.1% of those who started as non-regular workers at SMEs remained non-regular workers at SMEs even after three years.

27 Consecutive Months of Declining Employment Rate... Urgent Need for Real “Career Ladder”

This employment instability and structural job mismatch have only intensified the youth employment crisis. As of July 2026, the employment rate for young people (aged 15-29) stood at 44.2%, marking the 27th consecutive month of year-on-year decline since May 2024. Notably, the number of young people classified as “resting,” meaning not even seeking employment, reached 367,000 (9.0%), indicating further acceleration of disengagement from the labor market.

The report stressed that, to encourage young people to seek jobs at SMEs and prevent them from leaving the labor market, it is essential not only to improve current working conditions but also to provide a clear outlook for career advancement after employment. There is an urgent need for policy efforts to establish an effective “career ladder,” so that work experience gained at SMEs is properly recognized and utilized in the broader labor market. Specific measures suggested included ▲strengthening the career recognition system through initiatives like job competency banking and integrated career certification via Employment24, ▲enhancing the quality of onboarding at SMEs to broaden sustainable career paths, and ▲improving employment continuity at times of contract termination or job changing.

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