Friday, 12 June 2015

Young and old fight over jobs in South Korea

The Straits Times, 11 Jun 2015

SEOUL - With youth unemployment near a 15-year high, and the government planning to raise the retirement age, inter-generational conflict over jobs is rising in South Korea.

The jobless rate for workers aged 15 to 29 touched 11 per cent earlier this year and is about four times higher than for those aged 40 and above. But Korea also has an underdeveloped pension system and the highest elderly poverty rate in the Organisation for Economic Cooperation and Development (OECD), as firms push employees in their 50s into early retirement to contain costs.

An overall jobless rate close to the 10-year average belies the difficulty facing policymakers seeking to balance the needs of the young and the old.

Working longer would have helped Mr Lee Jong Ho, 59, who retired from Korea Railroad Corp two years ago and has been looking for another job since. Mr Lee's 2.2 million won (S$2,650) monthly pension is not enough to support him and his wife.

"Healthy people like me should work at least until 70 given that the average life span of people now is easily over 80," said Mr Lee. "I know that extending the retirement age could mean fewer jobs for young people. I'm willing to get paid a little less if I can keep working."

While there is no official retirement age in South Korea, a typical worker's career ends around 53, government data shows. After that, many try to get by on a combination of pension payments, savings, part-time work or small business ventures. But a new law taking effect next year mandates that large companies allow employees to work until at least 60.

Mr Kang Jin Ho, an English major at Hankuk University of Foreign Studies in Seoul, is 26 and still trying to get into the workforce. He has deferred graduating for years to maximise his employment chances, as many companies limit new entry hires to people still in school. Mr Kang has applied for more than 70 jobs already this year and been rejected every time.

"Getting a job was so much easier for my parents' generation, when the economy was expanding fast," he said, adding that "the average age of job seekers in my study group is 30".

OECD projections paint a gloomy picture for Mr Kang and the next generation of students. The number of people 65 and older in Korea will surge from 11 per cent in 2010 to more than 37 per cent by 2050, said the OECD.

Next month, President Park Geun Hye's government will announce its fourth set of measures in two years to help ease unemployment among the young.

Previous efforts have included improvements to career training at school and incentives for young people to join small and medium-sized enterprises, not just the large corporate icons that dominate the public imagination.

This time, the government may begin addressing the problems faced by Mr Lee and Mr Kang at the same time.

According to a Finance Ministry statement last month, financial support could be offered to firms that keep on older workers, while trimming their wages and using the savings to hire more young employees.

Labour unions have voiced opposition to the idea of a peak-wage system, in which workers' salaries decline from a certain age, which also runs counter to cultural traditions of basing pay on tenure and age, rather than performance.

"In a rapidly ageing society with weak growth momentum, you're going to get conflict between young and old over how to divide economic benefits," said economist Lee Geun Tae at Seoul's LG Economic Research Institute.


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