The End of Open Recruitment and the Era of Ladder-Style Job Mobility

The job market in South Korea is undergoing significant changes as the proportion of open recruitment (public recruitment) declines sharply.

The job market in South Korea is undergoing significant changes as the proportion of open recruitment (public recruitment) declines sharply. Instead, job mobility is becoming more prevalent between small to medium-sized enterprises (SMEs), mid-sized companies, and large corporations. This shift is driven by large companies’ preference for hiring experienced candidates through frequent hiring rounds, which impacts the job search and hiring trends of both young job seekers and mid-sized companies. This blog post explores the decline of open recruitment and the resulting changes in the job market.

Recently, South Korea's job market has seen a dramatic decline in the proportion of open recruitment, with a corresponding rise in job mobility between SMEs, mid-sized companies, and large corporations. According to a report from the Korea Labor Institute, the proportion of open recruitment in total job postings dropped to 35.8% last year, down from 39.9% in 2019. Companies are increasingly shifting towards frequent and rolling recruitment methods. Notably, 20% of companies that conducted open recruitment last year have indicated they plan to stop doing so by this year, suggesting further declines in open recruitment in the future.

Large corporations are actively utilizing frequent and rolling recruitment methods, preferring candidates who can contribute immediately. This has led to a "chain mobility" where workers from SMEs move to mid-sized companies and those from mid-sized companies move to large corporations. According to Statistics Korea, as of December 2022, 4.159 million employees changed companies, accounting for 16.0% of the total workforce. Among these job changers, 71.3% were from SMEs, with 12.0% moving to large corporations.

The decline in open recruitment has also brought about significant changes in hiring practices. While open recruitment traditionally focused on selecting general candidates and nurturing them within the company, frequent recruitment aims to hire individuals who already possess specific job skills, enhancing organizational efficiency. As a result, applying to multiple companies or reapplying after rejection has become less stigmatized, with companies now conducting hiring processes tailored to the needs of individual departments.

The shift away from open recruitment has also altered organizational cultures. A survey by the Korea Labor Institute found that only 26.8% of respondents felt that open recruitment practices were strongly influential, while 33.7% and 39.4% felt it was average or not influential, respectively. Additionally, the concept of collective training or orientation for new hires is gradually disappearing due to the decline in open recruitment and the impact of COVID-19.

Furthermore, recent data indicates that one in four new hires in March last year were "experienced new hires" rather than those with no prior experience. The proportion of new hires with no experience has decreased from 47.0% in 2019 to 40.3% last year, and the share of such hires in the latter half of 2023 dropped to 46.7%. This creates a cycle where inexperienced young job seekers struggle to find employment and accumulate experience, often leading them to take intermediate steps through mid-sized companies before reaching large corporations.

Mid-sized companies also tend to avoid hiring inexperienced new graduates due to concerns over the return on investment for recruitment costs. According to a survey by the Korea Economic Association, 64.2% of companies reported spending over 20 million won per new hire on adaptation and training costs.

Hong Kyung, the Youth Employment Policy Director at the Ministry of Employment and Labor, stated, "To address the trends in frequent hiring and experienced recruitment, the government is expanding opportunities for young people to gain quality work experience and practical project-based training. We are committed to minimizing mismatches in the hiring process by providing relevant information to both companies and job seekers."

The decline of open recruitment and the rise of frequent hiring methods are reshaping the job market. This transformation is accelerating job mobility from SMEs to mid-sized companies and eventually to large corporations, influencing hiring practices and organizational culture. Adapting to these changes will require more flexible and practical hiring strategies in the future.