According to ‘The Korea Times’, policymakers must change perceptions about labour issues. Granted, youth unemployment is a global issue, and not unique to Korea. What sets this country apart from many others is the speed in which it is going from bad to worse ― as well as the wrong approach government and business officials are taking to address it, which in turn is based on their misperceptions. The unemployment rate of young people (ages 15 to 29) stood at 8 percent in 2013, 3.7 times higher than the jobless rate of 2.16 percent for the older generation, the Bank of Korea (BOK) said Monday. The generation gap in jobless rates is far higher than the average gap of 2.1 times among OECD countries.
The youth unemployment rate has risen further to 10.2 percent in the first quarter of 2015, the highest in 16 years. Deputy Prime Minister Choi Kyung-hwan was right when he said, “The government feels extremely sorry to our youngsters who cannot find jobs although they desperately want to work.” The President Park Geun-hye then reiterated policy steps, including the additional hiring of public-sector workers such as teachers and nurses, and tax credits for businesses that employ workers. These are necessary steps to attract more of the idle work force back into the job market but hardly sufficient to turn the tide on this rapidly worsening problem. The government will announce these and other job-related measures next week ― about the 10th such policy package in 20 years ― but few are holding their breath for real change.
A more drastic, fundamental policy change is needed to turn around the situation, preceded by a paradigm shift among officials. There are few reports that have plausibly proved the relationship between peak wages and increased youth employment. That is not the solution, even though many governments around the world believe it.
Others say Korea’s job market should become more flexible, like the United States, to absorb more of the young, idle work force. They are forgetting Korea’s job security is the worst among major countries, as shown by the extremely short average work period of 5.6 years per job. What these pro-business analysts should watch in America instead is that 17 big U.S. companies, including Starbucks and Walmart, have recently decided to create 100,000 jobs for younger people. And how Japanese Prime Minister Shinzo Abe’s forceful rise in wages and domestic demand-boosting policies have led to a virtuous cycle of higher corporate earnings and near-full employment.
In the past 20 years, Korea’s economy has grown 20.9 percent but real wages of full-time workers increased only 6.1 percent, while those of temps fell by 2.8 percent. What politicians and bureaucrats must do is rack their brains on how to shift more of the fruits of growth from businesses to workers, young and old.