Labor flexibility is the key
The author is the editor of national news at the JoongAng Ilbo.
Private education — referring to classes at hagwon, or cram schools — is an investment that wastes money and reaps poor returns, argues John Lee, the CEO of Seoul-based Meritz Asset Management in his 2016 book titled “Mom, Buy Me a Stock.” Koreans spend excessively on private schooling for children, which explains why they have little left in their old age. Use the extra money to buy stocks instead, Lee advises. Teaching children to invest in stocks would be more productive parenting than sending them to hagwon that only make them “uncreative” office workers. He has a point in criticizing Korea’s hefty spending on tutoring and private education to send children to top schools.
The hugely-popular JTBC drama “SKY Castle” portrayed high-class families spending millions of dollars on professionals planning and grooming top-class students to get them into the medical school of the elite Seoul National University. The department stands at the peak of the higher-education pyramid. But is the money and trouble really worth it? Graduating from elite universities does not guarantee a rosy future. But a doctor’s license can a secure stable income. The choice is up to the individual. But there are many parents who think that’s the best option under the present conditions in Korea. In stocks, investments are also made on the odds on hitting the jackpot even if they underperform on average. Parents also may not want to take chances with the future of their children. They are willing to raise the stakes if they can afford to.
The majority are on their own to carve out their career after graduating from universities that their parents worked hard to get them into. Putting them in universities is easier than watching them find jobs, one parent I know complained. Parents are unhappy to see their children have to work harder to get a decent job despite all their work to get a college degree.
The 12-year private education market before entering college was estimated at 18.62 trillion won ($16.5 billion) in 2017, according to the Statistics Korea. The school-year population has been thinning, yet spending on private education has been on the rise since 2016. The spending per student has also been increasing.
The spending on education has dampened consumption and saving for old age. But whether such aggressive investments have really contributed to grooming a competitive workforce remains doubtful. The massive private education market would surely help sustain the workforce. But the results of heavy investments in private education are generally not so successful in terms of helping children to prepare for their school tests and get better grades. As Lee said, it may have been better to buy them stocks instead.
Instead of employing recruits at a large scale and training them, companies may opt to hire those to whom they can immediately assign work. The year-round recruitment policy can better serve experienced and skilled workers while worsening job opportunities for fresh college graduates.
What would be the solution to the conundrum? Labor flexibility should be guaranteed. In other words, it should be easier to change jobs. Flexibility can enable companies to recruit more people. But the measure is vehemently opposed because it also means easier layoffs. The government must solve the problem. It must ease what needs to be eased while strengthening protections.
When the labor market flows in a reasonable way, the education system will also change accordingly. The cycle of heavy spending on private education to send children to good schools and find stable jobs can only be changed this way. Companies cannot make changes alone. The government and education sector must work together with the corporate community to foster a more competitive workforce for the digital age.
JoongAng Ilbo, Feb. 18, Page 27