Is the sluggish youth employment due to AI?

Recent employment slowdown among young Koreans (15-29 years old) may not be solely due to artificial intelligence (AI), according to the analysis provided by the Korean Bank. In a report titled "Young Employment Reduction? Blaming AI? Transforming Career Ladders and Response Challenges," the bank suggests caution in interpreting recent youth employment trends solely through the lens of AI impact.

Instead, factors like normalization of over-recruitment post-pandemic, career-focused hiring, weakening internal training, and the expansion of remote work contributed to the slowdown.

The Korean Bank's research team found that the share of young workers in new hires decreased from the second half of 2022, indicating structural changes were underway before AI's widespread usage. Generative AI, like ChatGPT launched in November 2022, may have accelerated this shift, but recent youth employment declines could also be a result of normalization in the labor market post-pandemic.

Moreover, the overlap of AI-exposed industries with those that saw rapid hiring during the pandemic complicates the interpretation of youth employment decreases solely through AI influence.

Additional factors like changes in corporate training and work methods, with more rapid hiring and less public advertising of job openings, also contributed to the trend. This shift has weakened the traditional career ladder, where young workers gain experience to become mid-level professionals. Remote work, as well, has reinforced this trend by reducing informal learning among peers and increasing costs for onboarding and supervising new employees.

The bank identified a strong positive correlation between AI exposure and remote work ability, citing data scientists, lawyers, accountants, and programmers as examples.

Despite these findings, the bank does not dismiss the impact of AI on youth employment, emphasizing that young workers' adaptability to AI and new technologies could make them major beneficiaries in the long run. Policies should focus on preserving entry-level jobs and building new career paths for youth to learn and excel with AI, the bank suggests. Companies should also balance the support for young workforce redesign and investment in skills and human capital through tax incentives, among other measures.