Toward shared growth

Youth employment is the task of our time. As young people are struggling, “youth” has become a popular product in many areas.
Last year, the person who mentioned “youth” the most was President Park Geun-hye, according to a report by the Korea Press Foundation on youth unemployment, media reports and citizens’ awareness. Books on youth, such as “Youth, It’s Painful!” “880,000-Won Generation” and “No Country for the Youth” have been published.

However, the lives of young Koreans haven’t improved. As society consumes “youth,” the young people think they are living in “Hell Joseon” and give up on “this life.” What a painful paradox indeed.

As of the end of 2015, the official number of unemployed between the ages of 15 and 29 was 397,000. The unemployment rate was 9.2 percent. It went up to 12.5 percent in February. One in four unemployed Koreans is a youngster. It is the highest number since 2004. The real feel of the unemployed is even more serious. According to Statistics Korea, the real number of jobless young people in 2015 was 1.09 million, with an unemployment rate of 22.0 percent.

Jobs for young people are not only decreasing in quantity but also aggravating in quality. In 2014, more than 20 percent of new college graduates began their career with a short-term contract position of less than one year. This was more than double the number in 2008. Many of them will be fired when their contract expires and be pushed out of the labor market. And another contract position will be waiting. It is worrisome that those who begin with irregular employment will remain in the marginal edges of the labor market forever.
In fact, there is no clear solution for youth unemployment. Complex factors of economy, industry, education and labor need to be considered together. It is also associated with social policies such as social security and the compensation system.

The double structure of the labor market, the discrepancy of supply and demand, is not the only cause. Just like “labor reform” that the government pushes for, narrowing youth unemployment as a labor market issue won’t reach the solution. Only consistent policy direction encompassing various areas of society will resolve the issue.

In 2015, the Korean economy grew by a mere 2.6 percent, the lowest in three years. When the growth rate decreases and the economy loses vitality, it is hard to add jobs. The added jobs are mostly in the social services sector, such as nursing assistants, social workers and child care professionals. It is not easy for young people to choose an unstable position as their first job. And after the retirement age extension became mandatory, companies now have less motivation to hire young people for regular positions.

The peak wage system cannot be a solution. No matter how much the government invests in employment subsidies, the total labor cost for companies will increase. Extension of irregular employment contracts and easing of regular dismissal conditions won’t help, either. Even when a team chief is fired, it doesn’t mean an intern will be hired for a regular position.

The government policy focusing on qualitative expansion should be converted to the qualitative improvement of jobs. Youth unemployment is not due to an absolute shortage of the number of jobs. There are jobs out there. But they are so poor in quality that young people don’t want them. The policy should focus not on the top 10 percent of quality jobs but on making the remaining 90 percent “decent jobs.”
When the average jobs are decent, more young people will choose to work and accumulate skills and experience for a better future. These jobs can be found in small and medium-sized companies.

When small and medium-sized companies grow solidly, decent jobs for young people will be created. For their solid growth, there needs to be reliable investment. Currently, large corporations have astronomic amounts of money but do not have the places or technology to invest their money.

Small and medium-sized companies have investment ideas but no money. So the money that flows into large conglomerates should flow to small and medium-sized companies legally and effectively. When small and medium-sized companies have money and investment, productivity and employment will grow.

For the last five years, I have been advocating shared excess earnings, the selection of industries fit for small and medium-sized enterprises, and government procurement for small and medium-sized companies.

In the end, the solution to youth unemployment depends on large conglomerates’ consideration for small and medium-sized companies, their efforts to self-help and the government’s aggressive policy for shared growth.

Of course, shared growth is no cure-all. But it is the most feasible and effective solution in the given situation.
Translation by the Korea JoongAng Daily staff.

JoongAng Ilbo, March 21, Page 35