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Employment policy worsens job market polarization

By Korea Herald
Published : May 30, 2016 - 12:36
President Park Geun-hye’s administration has put top priority on increasing employment. In June 2013, it unveiled a roadmap to boost the country’s employment rate gradually to 70 percent by 2017.

Finance Minister Yoo Il-ho, who also serves as deputy prime minister for economic affairs, last week acknowledged the goal might be unachievable.



“To be candid, (I) think it may be a little difficult to accomplish the employment rate of 70 percent,” said Yoo during a lecture to a group of regional business leaders in Incheon.

The employment rate remained at 65.7 percent last year, below the target of 66.9 percent. The discrepancy is expected to widen this year as many workers are expected to lose jobs in the process of corporate restructuring. Furthermore, the targeted rate is higher at 68.4 percent.

Despite not meeting its target, efforts by the Park administration to create more jobs have helped keep employment rate at record high levels in recent years.

However, many experts note that job creation has done little to improve employment conditions as many young people remain jobless and the number of irregular workers continues to rise.

The youth unemployment rate, which soared to a record high of 12.5 percent in February, continues to hover at above 10 percent in the following months, according to government data.

Figures released by Statistics Korea last week highlighted the polarization of the country’s labor market.

The number of irregular workers here increased from 5.73 million in 2013 to 6.15 million this year, but they continue to make up around 32 percent of the total workforce.

The average monthly wage of irregular laborers was 1,511,000 won ($1,260) in March, far below 2,836,000 won for regular employees. The wage gap of 1,325,000 won marked a 6.3 percent rise from 1,246,000 won in the same month last year.

The proportion of regular employees subscribing to the national pension scheme increased by 1.2 percentage points to 83.2 percent over the cited period, with the corresponding figure for irregular workers decreasing by 0.2 percentage points to 37.5 percent, according to data from the national statistics agency.

Lee Jang-won, a researcher at the Korea Labor Institute, said the differences in job qualities could actually be far greater than what the figures related to employment status suggest, given the wide gap in working conditions between large and small companies in the country.

Over the past three years through March, the number of female wage workers increased by 805,000, while that of male wage earners rose by 685,000. About 40 percent of the newly employed women were temporary or part-time workers, with the corresponding figure for men remaining at around 17 percent.

More than 81 percent of the women hired on an irregular basis over the cited period were in their 50s and 60s.

This phenomenon may be seen as resulting from the effort by the Park administration to get more women to join the workforce. But it is far from a successful employment policy as nearly 20 percent of jobs created since Park took office in early 2013 were temporary or part-time ones taken by 50-something and 60-something women.

In the year through March, the number of temporary and part-time workers climbed by 7 percent and 6.2 percent, respectively, from a year earlier, while that of regular employees showed a 2.3 percent rise.

The high youth jobless rate, which Finance Minister Yoo described as “the most painful part,” reflects the failure of the Park government to create a sufficient number of decent jobs.

Government officials have called on the parliament to pass labor reform bills, which they say would help encourage companies to employ more young people by making the labor market more flexible. Some economic commentators argue the bills, the passage of which has been blocked by liberal opposition lawmakers, should be further strengthened to ensure the overprotection of unionized regular employees is eased or lifted.

Opposition parties, which combined have a majority in the new legislature that started its four-year term Monday, may feel the need to change their stance in the face of growing disgruntlement from frustrated young voters.

What politicians and policymakers should set their sights on is how to help workers prepare for long-term changes in job markets in the transition to new generation industries, experts say.

By Kim Kyung-ho (khkim@heraldcorp.com)

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