[Viewpoint] Enterprising work

Youth unemployment is a serious issue in Korea. Between 2004 and 2008, the employment rate of those aged 15-29 dropped from 45.1 percent to 41.6 percent, meaning only four out of 10 young people have jobs. The remaining 60 percent comprises not only students but graduates who are seeking jobs, have given up their job search or have no desire to work. The percentage of young people neither in employment nor in education or training tends to be larger in the highly-educated group; 25 percent of college graduates in their 20s were classified as such in 2005, the highest among OECD member countries.

Why are highly-educated people without jobs? One factor is that while hiring at large companies remains sluggish, a growing number of young highly-educated people hesitate to apply for jobs at small- and medium-sized enterprises (SME), which have chronic labor shortages. Around 80 percent of the workforce that SME manufacturers need are production workers, including machine operators and assemblers. The shunning of SMEs by highly-educated people is a natural outcome of Korea’s excess focus on higher education.

Youth employment should be addressed as a national issue. It is a social waste for young people to remain jobless after receiving an expensive education instead of finding work at SMEs. If the situation continues, these young people may face a fate similar to Japan’s so-called “lost generation,” a group of young people aged 25-35 who failed to find permanent jobs and in the end, fell into poverty during the country’s “lost decade” in the 1990s.

Social enterprise can be an alternative for young job seekers who were rejected by large companies in the face of fierce competition but are unwilling to perform production work at SMEs.

Social enterprise refers to social organizations that jointly operate a business to solve social problems. Social enterprise is similar to a civic group in that it is dedicated to solving social problems rather than maximizing profits. The main interests of social enterprises are support for the disadvantaged such as the disabled and children and environmental protection projects. To achieve their objective, social enterprises engage in profit-making activities, including manufacturing and sales of products and services, reinvesting the earnings in social purposes.

Juma Ventures, based in San Francisco, is an exemplary social enterprise that solves social issues through business operation. The company was originally established as a non-profit organization for the development of young people in poverty. It started ice cream sales business by concluding a franchise contract with Ben & Jerry’s, the ice cream maker, in 1994. Through profits earned from ice cream sales, it offers job training and employment for low-income youths, as well as college scholarships.

Social enterprises do not offer high wages. In the U.S., the annual salary at social enterprises is 60-80 percent of the national average. Yet, social enterprises can be an alternative for young unemployed people for the following three reasons.

First, although the main purpose of social enterprises is to employ disadvantaged people such as the disabled and homeless, they do not hire only these people. As a business organization, they also need workers in management, accounting and marketing. These occupations could attract youths who eschew jobs in manufacturing. Secondly, working in social enterprises facilitates the school-to-work transition. While the starting salary is low compared to other companies, it is suitable for new college graduates since most of them do not have to support a family. They can later leverage their work experience at a social enterprise to get better jobs. At the least, working for social enterprises is better than staying jobless.

Last but not least, social enterprise offers intangible forms of compensation such as higher self-esteem and self-fulfillment. Social enterprises help solve social problems related to poverty and the disadvantaged. The sense of self-satisfaction and pride gained in helping make the world a better place to live can exceed monetary compensation. According to a survey conducted by Statistics Korea in 2006, as much as 43.5 percent of young college graduates in their 20s said they prized intrinsic rewards such as personal interest and self-achievement more than financial compensation when choosing a job.

For example, Kang Seong-tae, a graduate from one of the top universities in the country, rejected a job offer from a prominent private education firm to establish a social enterprise called Gongshin. The enterprise provides free private tutoring and mentoring to teenagers from low-income households to help remove barriers to social mobility stemming from expensive private education. It received first prize in the start-up category at the Social Venture Competition held by the Ministry of Labor last month. “Great Wing,” another social enterprise founded in 2005, employs people with disabilities at its bakery business. A manager at Great Wing, who previously worked at a foreign food company, says her monthly salary has been halved but she is still satisfied due to the exciting and challenging work at Great Wing.

Employment at social enterprises in Korea remains low compared to industrialized countries. The U.S. has 415,000 jobs in social enterprises as of 2008, and in Britain, 55,000 companies provide 650,000 jobs as of 2005. In Korea, around 5,000 salaried people are employed in social enterprises as of June 2008.

It is therefore necessary for the government to address measures to expand jobs in this field. Yet, simply increasing the number of social enterprises to display short-term results will not be effective. Social enterprises that cannot survive without government subsidy would not be a vehicle providing sufficient value-oriented compensation for young people. Thus, the government should reform the current incentive system to promote competitive social enterprises that can bestow a vision for young people.

Also, the government should ease regulations to encourage the establishment of non-profit foundations because they can serve as a basis for social enterprises. Last but not least, social enterprises should try to enhance public awareness of their work by advertising and engaging in outreach activities.

*The writer is a research fellow at Samsung Economic Research Institute. For more SERI reports, please visit www.seriworld.org.
Translation by the JoongAng Daily staff.

by Park June