BOK: Full-time work key to youth hiring

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BOK: Full-time work key to youth hiring

Companies with fewer temporary workers are more likely to hire entry-level employees full time, a central bank report concluded Monday, giving fodder to President Moon Jae-in’s push to scale back companies’ practice of excessive contract hiring.

The report from the Bank of Korea suggested that the creation of full-time positions was important to boosting youth employment. The bank found that the percentage of temporary positions at a company was inversely related to the employment rate of people under the age of 30. Every time a company reduces its portion of temporary positions by 1 percentage point, youth employment increases by more than 0.23 percentage points, according to the report.

In the case of elderly employment, a 1 percentage point decline in contract hires can lead to an over 0.17 percentage point increase in the portion of workers over the age of 50.

The paper was jointly written by Nam Yoon-mi, a researcher at the bank’s micro and institutional economics team; Kwon Cheol-woo, a business professor at Kyungpook National University; and Lee Sang-wook, a business professor at Seoul National University of Science and Technology.

Based on the study, the authors noted that policies aimed at increasing the number of temporary jobs are not ideal for tackling the youth unemployment problem.

“The increase in temporary positions won’t likely translate to a rise in youth or elderly employment,” the report said. “To increase youth and elderly employment, the creation of regular jobs will be effective, even if the payment is not that high.”

Moon’s conservative predecessors, Lee Myung-bak and Park Geun-hye, focused on creating more temporary positions with flexible work hours as a way to boost employment.

The analysis comes as President Moon is gearing up to tackle the country’s record-high youth unemployment rate. Although Korea’s overall economic indicators including gross domestic product, exports and consumer sentiment have all recently improved, the youth unemployment rate hit a record 11.2 percent in April.

The government has proposed an extra budget this year worth 11.2 trillion won ($10 billion) that is focused on job creation and has pushed for temporary jobs at public institutions to be converted to permanent positions.

The central bank’s governor, Lee Ju-yeol, has struck a conciliatory note with Moon’s efforts to boost youth employment, saying making stable employment one of the bank’s objectives required serious discussion.


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