South Korea lost 211,000 youth jobs to AI while senior employment surged—what it means globally

Samsung's $400,000 bonuses hide a darker AI employment story

South Korea appears to be thriving in the AI era. Samsung Electronics and SK Hynix, the nation's leading chipmakers, have both surpassed $1 trillion in market capitalisation as global demand for chips and data centres accelerates 1

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. In May, Samsung reached a profit-sharing agreement with its union that awarded employees in the memory chip division an average bonus of nearly $400,000 1

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. Yet beneath this prosperity lies a troubling reality for young workers trying to enter the labor market.

Youth unemployment surges as AI reshapes hiring patterns

A study of administrative data by Bank of Korea economists Jinsu Han and Samil Oh revealed that 211,000 youth jobs for workers aged 15 to 29 disappeared over the past three years 1

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. During the same period, employment for workers in their fifties increased by 209,000, creating a stark generational divide 1

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. Youth employment fell particularly sharply in AI-exposed sectors: down 11.2 per cent in computer programming and system integration, 20.4 per cent in publishing, 8.8 per cent in professional services, and 23.8 per cent in information services 1

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Seniority-biased technological change favors experienced workers

The economists concluded that South Korea's labor market is experiencing seniority-biased technological change because AI more readily replaces entry-level tasks performed by junior workers that rely on codified, textbook knowledge 1

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. Meanwhile, AI tends to augment tasks requiring career-based tacit knowledge and social or interpersonal skills, which are more common among senior workers 1

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. Similar patterns have emerged in the US software profession, though South Korea's trends appear particularly stark 1

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Insider-outsider dynamics amplify AI's disruptive effects on employment

South Korea's deep economic fractures between "insiders" with secure jobs in large, productive companies and "outsiders" with insecure positions in small and medium-sized companies are widening 1

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. Samsung's profit-sharing agreement doesn't benefit subcontractor workers who receive lower pay and less security 1

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. Jiyeun Chang, senior research fellow at the Korea Labor Institute, explains that incumbent workers in large firms enjoy strong employment protection, so when firms adjust to new technology, the burden falls disproportionately on young people trying to enter the workforce 1

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Future Response Fund aims to address rising inequality

The government has money to spare thanks to rising tax revenues from semiconductor production 2

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. South Korea is forming plans for a Future Response Fund to invest in mega-projects, address inequality, and provide employment support for people in their twenties and thirties 1

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. One option involves using windfall money for hiring subsidies to encourage companies to train young workers, even if their labor can't easily be monetised until they acquire expertise 1

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. A more imaginative approach could extend security, training, and capital to outsiders such as the self-employed, enabling tech-savvy youth to create AI-powered startups 1

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. How Seoul addresses these challenges could provide a blueprint for governments worldwide facing similar AI-driven shifts 2

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