Degrees, jobs clash in labor transition

One of the nation’s largest business lobbies said the main contributing factor to Korea’s bad youth unemployment situation is an oversupply of college graduates, which has become a drag on the slow-growing economy.

The Korea Chamber of Commerce and Industry said last week that the educational system here should be dramatically reformed. The present emphasis is on entering one of the nation’s elite colleges. The chamber said more emphasis should be put on job aptitude training and that vocational education should begin in the early years of schooling to diversify Korea’s workforce.

The report said the nation’s youth unemployment rate will reach 9.5 percent by end of this year, which would be the highest level since the Asian financial crisis of 1997.

This unemployment rate is expected to keep rising in coming years, the chamber added, mainly because the mandatory retirement age for employees of large private companies will continue to rise, while the number of college graduates will also keep rising for next three years.

Because the Korean and global economies are expected to grow at a slow pace in the next few years, the chamber continued, the youth unemployment rate will stand at 9.7 percent in 2016, 10.2 percent in 2017 and 9.9 percent in 2018.

Korean labor law requires private companies with 300 employees or more to extend the mandatory retirement age to 60 starting next year. State-run companies and organizations’ retirement age will be 65. (At private companies, there has been no legally enforceable requirement that workers must be kept on until a given age in the past.) In 2017, companies with fewer than 300 employees will have to follow the same retirement age rule.

These changes are expected to be a drag on the employment of Korea’s youth over the next three years, a transition period when the number of college graduates will keep rising but the number of available jobs shrinks as older workers stay on the job, according to the report.

The number of bachelor’s degree holders reached 360,000 last year; about 70 percent of high school graduates go on to receive a college degree. That degree-holding cohort was nearly 80 percent larger than it was in 1990, when about 200,000 new bachelor’s degrees were awarded to 20 percent of high school graduates, according to date from the Korea Educational Development Institute.

The college graduate population has grown at a fast pace since 1996, when the Korean government began allowing colleges to set their own admissions quotas and requirements.

According to the chamber’s analysis, based on retiree and education statistics, the next three years will be the toughest as the number of retirees drops at a sharp rate before stabilizing as workers reach age 60.

About 16,000 people are scheduled to retire from jobs at conglomerates this year, a number that will fall to 4,000 in 2016 and 2017.

For the entire economy 179,000 employees are expected to retire next year. But after the new law is applied to smaller companies in 2017, retirement estimates plummet to 38,000 that year and 40,000 in 2018.

The chamber said the educational system should also adjust to set a curriculum based on the needs of employers in the future.

“Rather than a sluggish economy, the fundamental problem causing current youth unemployment is the government’s past policies that eased admission regulations and made Korea an academic background-centered society,” the report said. “The government should reform the educational system to emphasize early job aptitude education instead of early education targeted on entering prestigious colleges.”

The report said “grabbing a college degree doesn’t bring you quality jobs anymore,” adding that there are only 160,000 good jobs available every year being chased by 400,000 new bachelor’s and master’s degree holders.

The chamber urged a quick implementation of the peak-wage system, saying it would help lower unemployment rates in the future.

BY KIM JI-YOON[kim.jiyoon@joongang.co.kr]