Regular wage employment falls for first time in 26 years and 5 months; IT sector hits workers in their 20s, professional services hit those in their 30s, as manufacturing slump and AI reshape hiring

A college student browses job listings. [Newsis]
A college student browses job listings. [Newsis]

Regular wage employment — long considered the last pillar of South Korea's labor market — has turned negative for the first time since the Asian financial crisis.

The decline is concentrated among workers in their 20s and 30s, deepening concerns that a manufacturing slump and AI-driven shifts in hiring practices may be fundamentally reshaping the job market.

Data from the Ministry of Statistics' national statistics portal KOSIS and microdata from the economically active population survey show that regular wage workers numbered 16.74 million in May, down 7,000 from the same month last year.

Regular wage workers are salaried employees expected to remain employed for at least one year and are classified as holding quality jobs close to full-time permanent positions. The last time this category recorded a decline was December 1999 — down 56,000 — when the country was still reeling from the Asian financial crisis.

Since turning positive in January 2000, regular wage employment had risen year-on-year for 316 consecutive months through April. The category held up even during the COVID-19 pandemic, remaining in positive territory through December 2020. At its peak in 2022, it was adding as many as 800,000 to 900,000 workers a month compared with a year earlier.

After growing by 200,000 to 300,000 a month last year, the pace of increase shrank to around 100,000 earlier this year before turning negative last month. Overall employment fell by 40,000, yet regular workers' share of total employment hit a record high of 57.5 percent.

[Provided by the Ministry of Statistics]
[Provided by the Ministry of Statistics]

The drop in regular employment was most pronounced among young workers. In May, regular wage workers in their 20s fell by 164,000 and those in their 30s by 33,000, for a combined decline of 197,000 — the steepest drop since December 2020, when COVID-19 dealt its sharpest blow to the labor market at minus 217,000.

Manufacturing led the decline among young regular workers. The sector shed 36,000 regular workers in their 20s and 56,000 in their 30s, a combined loss of 92,000. Total manufacturing employment also fell by 140,000, extending a losing streak to 23 consecutive months.

Workers aged 60 and older bucked the trend, with regular employment in that group rising by 18,000. The pattern suggests that quality manufacturing jobs are disappearing for younger and middle-aged workers while shifting toward older employees.

By industry, the data also hint at structural changes driven by the spread of AI. Regular workers in their 20s fell by 57,000 in the information and communications technology sector — a steeper drop than in manufacturing. Regular workers in their 30s in the same sector, however, increased by 26,000.

Industry observers say hiring in software development and programming is shifting away from entry-level candidates toward experienced workers. Some analysts add that generative AI is replacing coding and routine development tasks, reducing demand for junior developers.

Among workers in their 30s, the sharpest decline in regular employment was in professional, scientific and technology services, which shed 76,000. The losses were concentrated in research and development, architecture and engineering, and legal and accounting services. Education services fell by 28,000 and wholesale and retail trade by 21,000.

The government said it is too early to conclude that AI is driving the employment decline. Officials said the more likely explanation is a combination of factors: a manufacturing slump, slowing economic growth and companies pulling back on hiring.

Earlier this year the government's 2026 economic growth strategy projected annual employment growth of 160,000, premised on improving conditions in construction and manufacturing. A Middle East war that broke out in late February has since pushed up raw material prices and raised costs for businesses, casting uncertainty over when employment might recover.

Deputy Prime Minister and Finance Minister Koo Yun-cheol said employment tends to lag behind the real economy, which is why the shock from the Middle East war is showing up with a delay. "We will closely monitor employment trends by sector and demographic group and prepare response measures," he said.


fact0514@heraldcorp.com