SEOUL, SOUTH KOREA, October 24, 2019 — Youth unemployment is getting a serious social problem. People looked for more decent jobs in the past, but now they are almost forced to reconsider if they would enter the job market or not in the first place. Voluntary and involuntary unemployment and giving up a job seeking activity cause lower income leading to a barrier against the entry into society. Furthermore, these issues are also leading to mental health problems and a loss of social activities.
The monthly average income of the youth below 29 years old amounts to KRW 2,532,000 (USD 2,160) (Korea Research Institute for Human Settlements, 2017), while the monthly average house rental fee for single-person youth households in Seoul is KRW 492,000 (USD 420). It means that they spend 19.4 percent of their income for the monthly rental. In addition, another research shows that the youth accounts for 72.4 percent of residents in gosiwon, or facilities packed with tiny one-room accommodations.
To tackle this problem, the Seoul Metropolitan Government announced a plan to expand the investment in the youth as an “investment for the future.” Its basic directions and goals are to solve the issue of having an unfair starting line when it comes to “employment,” and “living,” which are two major pain points for the youth. Seoul will invest KRW 430 billion (USD 367 million) for three years.
The key of this scheme is to increase the number of beneficiaries of the “youth allowance,” which is provided monthly KRW 500,000 (USD 430) per person as job-seeking expenses for up to six months, from currently 7,000 people per year to 100,000 for the next three years. The scale of the amount can cover all potential beneficiaries of youth allowance based on the city government’s estimates. In other words, all young generation who needs the allowance to find a job can be eligible for the program at least once in a lifetime.
In addition, Seoul will provide support for monthly rental fee for the youth. It provides KRW 200,000 (USD 170) per month for up to 10 months for single-person youth households who suffer from high living expenses in the city. Starting from 5,000 beneficiaries next year, the city government plans to provide the support for a total of 45,000 people from 2021 to 2022.
First of all, the allowance will amount to KRW 330 billion (USD 282 million) for next three years from 2020. The number of beneficiaries will be 100,000 people which are potential beneficiaries estimated by the city government. The estimates were made after excluding the persons who are employed, who are serving the military duty or who have already received the allowance and the top 25 income earners and graduates who have not been employed for more than two years after graduation. The Seoul Metropolitan Government assumes that the rate of application for this program would be 70 percent.
In the past, the city government selected beneficiaries among the unemployed who satisfies the basic requirements such as income. From now on, any young person who meets the basic conditions is eligible for youth allowance. Seoul will assign KRW 100.8 billion (USD 85.9 million) to provide support for 30,000 persons, 4.6 times up from this year (7,000 people). (35,000 persons in 2021 and 35,000 persons in 2022)
The requirements for application and the amount of the allowance will be same as before. The requirements are those living in Seoul with “below 150 percent of median income” and “who are not employed for over two years after graduation aging from 19 to 34 years old.” The monthly allowance amounts to KRW 500,000 and the support will be given for up to six months. (one time in a lifetime)
The monthly rental support for the youth will amount to KRW 200,000 per month for up to 10 months for single-person youth households from 19 to 39 years old (below 120 percent of the median income). Next year, the city government will assign a total of KRW 10 billion (USD 8.5 million) to provide support for 5,000 people (20,000 persons in 2021 and 20,000 persons in 2022). The number of single person households aging from 20 to 39 years old and living in Seoul is 580,000 (Statistics Korea, 2018). Among them, 63.7 percent lives with paying for a monthly rental fee (60.7 percent for monthly rental with deposit, 3 percent for deposit-free monthly rental).
In addition, the city government provides the loan and interest (annual rate: 2%) support for housing deposit for the youth from 19 to 39 years old. The eligibility requirement for annual income will be eased from KRW 30 million to KRW 40 million starting from next year. The scale of the loan for home deposit will be increased up to KRW 70 million from KRW 25 million. The Seoul Metropolitan Government aims providing support for 1,000 persons next year by assigning KRW 435 million (USD 370,845).
The Seoul Metropolitan Government will assign KRW 111.2 billion (USD 94.8 million) for the next year’s budget as the youth allowance (KRW 100.8 billion) and living expense support for the youth (KRW 10.4 billion), which will be submitted to the Seoul Metropolitan Council.
Meanwhile, the effect of youth allowance has been proved since it was introduced in 2016. According to a follow-up study on the program participants in 2018, 47.1 percent of the respondents say that they were able to get a job by conducting job seeking activity, starting their own business, or performing creative activities. 83 percent said that the program was helpful to achieve their goal of employment and 88.7 percent said that it helped a lot in a more direct manner than the other policies. The satisfaction level about the youth allowance reached 99.4 percent.