Youth jobs budget hits post-2021 high as Labor Ministry spending rises to W38.95tr

The government has set next year's youth employment budget at 3.3 trillion won ($510 million), up about 700 billion won from this year — the largest increase since 2021. The Ministry of Employment and Labor's total budget also rose by 1.28 trillion won to 38.95 trillion won. The ministry financed the expansion through about 4 trillion won in spending restructuring, directing resources toward youth employment, social insurance for vulnerable workers, industrial accident prevention and work-life balance.

According to the ministry, the 2027 budget proposal stands at 38.95 trillion won, up 1.28 trillion won, or 3.4 percent, from this year's base budget of 37.68 trillion won. The general account falls by 1.58 trillion won to 4.33 trillion won, and the special account shrinks by 448.7 billion won to 308.9 billion won. Fund expenditures, however, rise by 3.3 trillion won, or 10.6 percent, to 34.31 trillion won.

The ministry reviewed both mandatory and discretionary spending from scratch during the budget process, restructuring about 4 trillion won — short of its original 4.3 trillion won target. Savings from consolidating overlapping programs and shifting vocational training toward AI will be reinvested across three priority areas: future readiness, inclusion and security.

The youth employment budget rises about 700 billion won, or 27 percent, from 2.6 trillion won this year to 3.3 trillion won next year. "This is the largest increase in the youth employment budget since 2021," a ministry official said.

The ministry is redesigning its youth support programs around three stages: preparing to enter the labor market, gaining experience and building a career, and securing and retaining employment. A new program called the Youth First Employment Support System, or K-Youth Guarantee, will provide job-seeking allowances and employment support services to young people with no prior work experience. The budget stands at 379.3 billion won, covering 160,000 beneficiaries.

The monthly job-seeking allowance will increase from 600,000 won to 650,000 won. The program will also offer career exploration, work experience and vocational training linkages, and mock interviews. The redesign reflects criticism that the existing National Employment Support System effectively barred young people with no work history from participating.

A network of Polytech Youth Stepping-Stone Campuses will be established across eight regional hubs nationwide for young people who are neither working nor studying, as well as graduates of vocational high schools. With 56 billion won allocated, the campuses will let participants explore new skills and receive professional counseling and pre-training.

The youth work-experience support budget grows by 16.3 billion won, from 207.6 billion won this year to 223.9 billion won next year, covering a total of 39,000 participants — 26,000 in internship placements, 10,000 in project-based programs and 3,000 in customized support tracks. An additional 1,000 slots will be created in social-value sectors that young people prefer.

The K-New Deal Academy, launched through a supplementary budget this year, will expand from 10,000 to 50,000 participants. Large companies and other employers favored by young workers will provide job training and hands-on experience centered on advanced industries such as AI and semiconductors. Next year's budget for the program is 489.5 billion won.

A new program called Youth AI First Career Support, budgeted at 14.5 billion won, will help young people who have completed AI training take part in real company projects. It will launch as a pilot for 750 participants next year, with expansion depending on results. Participating companies will receive subsidies covering youth wages and mentoring costs.

The Youth Playground program, which supports young people who completed vocational training but have yet to find work or start a business, receives 20.1 billion won. Five offline hubs and an online community will provide mentoring from working professionals and job market information.

The number of beneficiaries under the Youth Job Leap Incentive program will increase from 105,000 this year to 130,000 next year. The support payment for young workers employed outside the Greater Seoul metropolitan area will rise from a maximum of 7.2 million won to a maximum of 18 million won over two years.

Vocational training budgets aimed at developing talent for future industries such as AI will also grow. The K-Digital Training budget rises by 87.6 billion won, from 521.3 billion won this year to 608.9 billion won next year. The number of AI trainees will double from 10,000 to 20,000, and trainees in non-metropolitan areas and population-declining regions will receive additional special training allowances.

A proposed once-in-a-lifetime unemployment benefit for young people who voluntarily leave their jobs — which the ministry had been reviewing — was not included in the budget proposal. "There were concerns that paying unemployment benefits to voluntary leavers could increase turnover at small and medium-sized enterprises," a ministry official said, adding that the ministry plans to reintroduce the measure after developing safeguards against such side effects.

Five ministry programs — including the Youth Job Creation Support program and the Youth Employment and Career and Work Experience Support program — have been transferred to the Future Response Fund, a new fund to be established next year. The ministry's programs moved into the fund total 2.57 trillion won, of which about 2.1 trillion won was previously funded through the general account.

"Taking the transfer into account, spending on general-account programs can effectively be seen as having risen by 500 billion to 600 billion won," a ministry official said. "The funding comes from the Future Response Fund, but the ministry remains responsible for program design, budgeting and execution."

Because the Future Response Fund relies heavily on additional tax revenue tied to the semiconductor boom, the stability of the transferred programs could be at risk if the semiconductor cycle turns down. Asked whether youth programs could be moved back to the general account if the fund shrinks, the ministry said no decision had been made.

Under the inclusion pillar, the government will strengthen social insurance and retirement income security for vulnerable workers.

The Durunuri program, which subsidizes social insurance premiums for workers at small businesses, will receive 714 billion won. The number of beneficiaries will rise from about 1.083 million to about 1.799 million. In addition to existing national pension and employment insurance support, the program will cover about 20 percent of industrial accident and national health insurance premiums for low-wage workers and platform workers at businesses with fewer than 10 employees.

Businesses with fewer than 30 employees that adopt a retirement pension scheme ahead of the mandatory deadline will receive support covering 10 percent of contributions for workers earning less than 130 percent of the minimum wage. The ministry has budgeted 6 billion won for fiscal support based on an estimated 70,000 eligible workers. Businesses with fewer than 50 employees that borrow operating funds to introduce a retirement pension plan will also receive a 2 percentage-point interest subsidy.

Under the security pillar, budgets for industrial accident prevention and protection of workers with unpaid wages will expand. Some 40.1 billion won has been allocated to support facilities and equipment at 2,400 workplaces with fewer than 300 employees that are vulnerable to fire and explosion. The industrial accident insurance benefit budget rises by 478.3 billion won, from 8.1463 trillion won this year to 8.6246 trillion won next year.

The advance industrial accident insurance payout system — under which medical and suspension-of-work benefits are paid in advance when a claim takes longer than a set period to process — receives 43.6 billion won. The government aims to implement the system in the second half of 2027 after amending the relevant law, with specific eligibility criteria and coverage to be finalized after the legislation passes.

The wage advance payment budget, which covers unpaid wages on behalf of employers, rises by 30.5 billion won from 746.1 billion won to 776.6 billion won. An additional 4.3 billion won will go toward establishing a new Labor Inspection and Investigation Training Institute to strengthen the investigative capacity of labor inspectors.

The maternity and childcare support budget for work-life balance rises by 198.2 billion won, from 4.0728 trillion won this year to 4.271 trillion won next year. Parental leave benefits will receive 3.5016 trillion won, and the monthly incentive paid to employers whose male workers take parental leave will double from 100,000 won to 200,000 won.

Meanwhile, the budget for a proposed Labor Welfare Council — a mutual-aid body the government has been developing for platform workers, freelancers and other non-traditional workers — was not included in this proposal. The ministry said it will continue preparing to institutionalize the body next year even without a dedicated budget. The government's budget proposal will be finalized after review and approval by the National Assembly.