Young people seek assistance at a job center in Seoul, Nov. 6. Yonhap

After Kim graduated from college in Seoul in February 2023, she worked at several companies on a temporary basis while continuing her efforts to secure a position at a major conglomerate. However, she repeatedly faced rejection during the final stages of the hiring process.

"Every rejection feels deeply personal, and it started to take a toll on my mental health. So I made the decision to pause and focus on taking care of myself," the 27-year-old said, asking for anonymity due to privacy concerns.

Kim is one of many economically inactive young Koreans taking a break from the labor market for reasons not officially recognized by the government, such as raising children or pursuing education.

"While key employment indicators continue to show strong performance, a noticeable rise in the number of individuals classified as taking a break within the economically inactive population this year is striking," the Bank of Korea noted in a report published Monday.

While the core working-age population (aged between 35 and 59) and those aged 60 and older have shown little change in their economic activity, it is the younger generations with prior work experience who are driving the trend.

Data from Statistics Korea shows that the number of Koreans aged between 25 and 34 in this category has been increasing steadily, reaching 422,000 as of the third quarter of 2024. This represents a 25.4 percent increase compared to the same period last year.

The report highlights a significant decline in employment quality for these younger individuals compared to pre-pandemic levels.

"Young people typically have higher educational attainment than the core working-age group and are more likely to make voluntary job choices, reflecting higher standards for job selection," the report stated.

As a result, the "mismatch between the limited availability of high-quality jobs and these elevated expectations" has prompted many younger people to voluntarily withdraw from the labor market, coupled with companies' preference for hiring experienced candidates.

On the other hand, the employment quality of the core working-age population has improved compared to pre-pandemic levels.

Economic factors also appear to play a role in involuntary breaks. Individuals in this category were predominantly employed by small and medium-sized enterprises with fewer than 300 employees or in face-to-face service industries, suggesting that involuntary job separations are largely occurring in roles with comparatively lower job quality.

The report's authors cautioned that the prolonged periods of inactivity among youth could lead to permanent withdrawal from the labor market or a shift into NEET (Not in Education, Employment or Training) status.

A precedent can be observed in Japan. During the economic downturns of the 1990s and 2000s, employment conditions for younger people deteriorated disproportionately. The rise in young NEET people during that period gradually translated into an increase in NEET individuals within the core working-age population, prompting the government to expand policy support to those aged up to 49.

"The growing number of young people taking a break threatens to undermine the future labor supply, underscoring the need for targeted policy measures to reintegrate them into the labor market," the report stated.