Korea’s better halfIf South Korea wants to progress from a middle-income country into the ranks of the rich - and it does - that will mean restoring brisk growth, year in and year out. But there is a fundamental obstacle to realizing this ambition: a shrinking workforce.
Korea’s economy, like that of Japan, on which it is broadly modeled, struggles with two interrelated demographic challenges: declining fertility rates and a rapidly aging population. Korea has one of the world’s lowest fertility rates. At the same time, it is one of the world’s most homogeneous societies and resists the idea of mass immigration. Meanwhile, Korea’s old-age dependency ratio - the proportion of the population aged 65 and over compared to those of working age - is expected to soar 400 percent by 2050. Researchers at the Center for Strategic and International Studies in Washington estimate that by 2050, 38 percent of Koreans will be over 65 - only a whisker below the 39 percent figure projected for those renowned champions of long lives and few babies, Italy and Japan. In the U.S., by contrast, the percentage of seniors is expected to be 20 percent, while in Germany, it is 31 percent.
In the absence of Herculean-and improbable-gains in productivity, Korea stands little chance of climbing the economic ladder if it continues to mint more retirees but few babies.
One way to resolve this dilemma: get more women to work. Right now, Korea has one of the lowest labor force participation rates in the Organisation for Economic Cooperation and Development (OECD); in 2008, only 53.2 percent of Korean women were in the workforce, four points lower than the OECD average, and higher than only Mexico, Hungary, Italy, Poland and Turkey. The U.S. rate is 65.5 percent, and Japan, whose social model is most similar to Korea’s, is 59.7 percent.
There are more women in the workforce in Korea than ever; a decade ago, only 47 percent of women worked. But even that progress is something of a mirage. It is difficult for women to build careers; more than 40 percent of Korean women are temporary or part-time workers, with lower wages and benefits and fewer opportunities for advancement. Women who do work full time almost always quit after having a child - or are discouraged from returning to the workforce by inflexible employment policies, long hours, lack of child care and social disapproval. A Korean career woman who has a child doesn’t just look up at a glass ceiling, she must also ascend a slippery ladder with the rungs missing at bottom, top and middle.
According to the Korea Labor Institute, there are only 8.1 women managers for every 100 male managers; the OECD average is close to 30 percent. The wage differential between men and women in Korea is almost twice as much as in the rest of the OECD. And Korea is unique in that college-educated women are actually less likely than their less-educated sisters to work. No Korean has ever been named on Fortune magazine’s annual survey of the 50 most powerful international businesswomen.
To some extent, the government recognizes the problem. There is a Ministry of Gender Equality, and Seoul has started a “Happy Women, Happy Seoul” initiative.
There is no one universally accepted approach to deploying the talents of women. Not every society wishes to emulate Denmark, where three-quarters of women work. And in many ways, Korean society is enviable, with its low levels of crime, out-of-wedlock births and divorce.
But the statistical evidence leads to an inescapable conclusion: in today’s Korea, too much talent is left in the kitchen.
From ‘Korea 2020
28 essays on Korea’s future edited by McKinsey & Company, Inc.
Random House Korea, Inc.
A project with the International Advisory Council to the Korean President
*The writer is a former assistant managing director at Fortune
By Cait Murphy