Thousands of young graduates struggle to find jobs in South Korea's rigid labour market

But President Park's bid to revamp rigid labour laws faces opposition
The Straits Times, 25 Sep 2015

SEOUL • In the past year, Ms Kim Yoon Sung applied to about 120 companies for a job, and could not land even one.

Instead, the 26-year-old South Korean is on her fourth outsourcing contract. She is one of tens of thousands of young graduates struggling to get regular employment in Asia's fourth-largest economy.

"It's become normal for people in my generation to fail, even after writing applications to well over 100 companies," Ms Kim said. "The situation is just getting tougher."

South Korea's rigid labour market is increasingly seen as a drag on an ailing economy, prompting President Park Geun Hye to push a revamp in labour laws that would be the biggest in nearly two decades.

Ms Park wants to make it easier for companies to fire underperformers, base wages on merit, shorten work hours, ease outsourcing rules and expand unemployment insurance. The reforms will change the system of stable employment and seniority-based remuneration that was enforced by the unions, and underpinned South Korea's breakneck economic growth into the 1990s.

Her ruling party hopes to push labour reform legislation through the current session of Parliament ending in December, but faces opposition from some unions and the main rival party.

However, the conglomerates that have driven South Korea's emergence as an industrial power support more flexible labour laws.

"This is the first time in many years that we are trying to do something to change a problem that is getting ever more serious," said Dr Kim Dong One, the dean of Korea University Business School.

In an economy dominated by companies like Samsung Electronics and Hyundai Motor, limited labour flexibility makes it harder to build up the service sector.

The Korean Confederation of Trade Unions, the more strident of two big labour umbrella groups, says the reforms would hurt job security and wages, and destroy collective bargaining. It has vowed to oppose all ruling party candidates at parliamentary elections due next April.

On Wednesday, it called a nationwide strike and held a rally in Seoul that drew thousands, with some protesters scuffling with police.

The opposition, New Politics Alliance for Democracy (NPAD), is demanding that any change in labour laws be tied to requiring firms to share more profits and increase employment.

With just 47 per cent of parliamentary seats, the opposition cannot by itself block law changes, although the NPAD holds the chairmanship of a key committee that would review law revisions.

The government is betting that enough voters are discouraged by their job prospects to make it worth pushing the legislation ahead of the parliamentary elections.

The last time South Korea made major changes to labour rules was in 1998, when it enabled companies to lay off workers under emergency circumstances, in exchange for a bailout from the International Monetary Fund.

At 22 per cent, the share of temporary workers in South Korea is double the OECD average. Non-permanent workers are also falling further behind on wages, earning 54 per cent of what regular employees earn for similar work in South Korea, compared with 65 per cent in 2004, government data shows.

Youth unemployment hit a 16-year high early this year, and could worsen as the retirement age begins to rise next year.

Ms Kim, who studied Chinese language and literature, earns about 1.2 million won (S$1,400) a month in her temporary job, roughly half the average starting salary for staff positions at Korean firms.

She said she has lowered her expectations: "I am no longer looking at big companies, but just hope to get an opportunity at any company doing business with China."

REUTERS

Youth jobless rate 'hell' for South Koreans
Govt under fire from young people, who coin 'Hell Joseon' term as youth unemployment hits 10%
By Chang May Choon, South Korea Correspondent, The Straits Times, 8 Oct 2015

With the youth unemployment rate in South Korea hitting a high of 10 per cent this year, young people are having such a hard time that they have coined a term online to describe their misery.

Welcome to "Hell Joseon", they say, a feudal society controlled by elites, where "commoners" like them live without hope. Joseon was the last dynasty in Korea whose reign ended in 1910.

"Everyone uses the term because they all feel it rings true. Even those with jobs have no hope," said Miss Cho En, 29, who has been freelancing in translating and writing since graduating with a degree in communications in 2010.

Youth unemployment is one of the biggest issues in South Korea, with many big companies cutting back on recruitment due to a sagging economy and a growing pool of fresh graduates vying for the same coveted positions.

More than 1.1 million young people are having particular difficulty finding jobs, and 32 per cent of those employed are holding non-regular jobs, according to data from the Ministry of Employment and Labour.

A labour reform drive is underway to overhaul the job market and seniority-based wage system.

President Park Geun Hye also started a youth employment fund in August, pledging 20 per cent of her monthly salary and an initial donation of 20 million won (S$24,400). Her effort drew a flurry of donations from other high-ranking officials including Prime Minister Hwang Kyo Ahn, as well as conglomerates, companies and banks.

What is known as the Youth Hope Fund, however, got nicknamed Youth Torture Fund by critics who slammed it as a public-relations stunt aimed more at showing off than solving the fundamental issue.

Local news reports noted that bank executives exerted pressure on all employees, even low-paid part-timers, to make contributions to the fund, likening it to the government "passing the buck" to the public.

Labour activists and unions also raised concern that companies would have less budget to spend on recruitment after making a donation to the fund, and that the government did not specify any spending plans even though the fund raised more than 1.9 billion won from about 50,000 people in just five days.

Yesterday, Mr Hwang, together with Labour Minister Lee Ki Kwon and Policy Coordinating Minister Choo Kyung Ho, announced at a press briefing that a foundation and, subsequently, an academy would be set up by the end of the year to manage the fund. About 4.3 billion won has been raised so far.

They said that the fund will be used to cover gaps in existing policies, while the academy will provide job information and training to young people and match them with potential employees.

The ministers did not give specific details though, causing some in the media to question how this will be different from existing job policies, and if the money - a small fraction of South Korea's annual budget of 2 trillion won for job creation for young people - would really make a difference.

"It's kind of naive to think that collecting a pile of money would be able to solve a huge structural problem," said Miss Cho.

The bigger problem, she believes, is the country's rigid top-down corporate culture that is suffocating young people with a lack of work-life balance, and limits on freedom of expression. She said her cousin, for instance, quit her job at a prominent tyre manufacturer as she could not stand the work culture there.