[Viewpoint] Fewer opportunities for younger workers

There has been rightful concern about Korea’s unemployment rate in the face of the global recession. But the current trauma seems to have a way of hiding under a bigger picture that transcends both good and bad economic times.

As any labor economist will tell you, unemployment statistics are understated in advanced economies, as they only reflect workers who are actively but unsuccessfully looking for jobs. In all nations, there are “discouraged” workers who have given up looking for work. They usually represent about 5 percent of the population in advanced countries. So, if a nation is said to have a 6 percent unemployment rate, the real rate is closer to 11 percent.

To make matters even more confusing, you have to find the line that separates those who are categorized as being unemployed from those who are employed.

If you tutor for a couple of hours a week or work Friday evenings in a convenience store, are you technically unemployed?

Probably so.

But let’s say you normally work Friday afternoon through Sunday evening at a convenience store. Are you now considered employed? By the standards used by most governments, you are not part of the unemployment statistics.

In 1987 while at business school, I was the lone American assigned to work with Korean students on a microeconomics class project focusing on South Korea. I had just left a career in human resources, so I was given the labor-related portion of the assignment.

What I discovered came as no surprise. There was a serious imbalance between educational output and labor. In other words, the overall population was overeducated in terms of academic qualifications versus job requirements. As a result, many college graduates were unemployed. Rather than lower their standards and sign up for blue-collar work, they decided not to have a job at all. So it followed that there was a labor shortage in many factories and other blue-collar environments.

But allow me to put the above into today’s context. At the time of my study, about 30 percent of South Korean high school graduates went on to secondary education at two- and four-year colleges. Since there is a low dropout rate in Korean schools, conservatively speaking, at least a quarter of the population had some kind of college education back then.

Now consider this: Today almost 100 percent of young Koreans finish high school and a whopping 84 percent go on to secondary education. That means eight out of 10 young Koreans have at least a two-year college degree.

Looking at employment by industrial sectors, let’s compare 1990 and today. In 1990, roughly 47 percent workers were in the service industry, 28 percent in manufacturing, 18 percent in agriculture and 7 percent in construction. In 2008, roughly 68 percent were in services, 17 percent in manufacturing, 7 percent in agriculture and 7 percent in construction.

While looking at percentages alone can be misleading, we can still surmise that the imbalance between education output and labor demand has been growing.

While employment in the services sector has nearly doubled, the rate in those who have earned an advanced degree has outpaced that growth. And, of course, many service jobs require you to wear a name tag and ask, “Would you like fries with that?”

One of the disturbing results of all of this is started in Japan and in recent years has been observed in Korea. It is the NEET (Not in Education, Employment or Training) generation. I haven’t seen the latest statistics, but a year ago ? before the current recession ? more than 1.3 million young Koreans were not employed or pursuing formal education or training. Many were hanging out at home, “studying” on their own for some kind of qualification or barely working part-time. As a result, only about 63 percent of South Koreans in their 20’s were economically active a year ago.

Furthermore, Korea, the world’s most Confucian society, is facing generational competition like never before. As in many other countries, the lion’s share of younger Koreans resent the fact that there are fewer opportunities. And like other advanced countries, business organizations are becoming increasingly pyramidal in shape. Consequently, as company men approach the age of 50 they often find themselves retiring prematurely, as there is little capacity for Korean companies to accommodate older and more expensive workers.

Naturally, the current economic difficulties have exacerbated the issue of forced retirement. At the same time, many more recent university graduates compete for fewer suitable jobs.

All of this hits home when I connect private coaching or mentoring services by recently retired executives with multinational companies as a means to upgrade “rising star” junior managers. Often I bring up this subject when I meet human resource professionals.

On more than a few occasions when the HR manager is a younger person, the first reaction is quite negative. The young manager often misunderstands the concept as yet another ploy by aging baby boomers to deny employment opportunities to younger Koreans.

Inevitably upon my reiteration of the concept, the young Korean finally understands that the program is meant to enhance job skills of younger employees and not to deny employment opportunities. But more than once I have been taken back by this strongly defensive, generational attitude held by younger Korean employees.

Above, I have only discussed the “what.” There is not enough space here to adequately review the “why” and examine the possible remedies. Perhaps in the near future I may have the opportunity to address those matters. Meanwhile, we need to be aware that there is increasing discontent among Korea’s highly educated, underemployed younger generations.

*The writer is the president of Soft Landing Consulting, a technology sales and marketing firm (www.softlandingkorea.com).

by Tom Coyner