Korea's employment gap just keeps growing

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Korea's employment gap just keeps growing

Published: 23 Jan. 2022, 18:00

Jobs are remaining unfilled at small- and mid-sized enterprises (SME), as young applicants turn their noses up at them.

A shoemaker makes shoes at a workshop at Seongsu-dong, eastern Seoul. [NEWS1]

Mr. Park, 62, who runs an automotive parts supplier in Ansan, Gyeonggi, said he can’t fill jobs.

“Mold manufacturing requires a certain level of skill, so we can’t hire short-term workers or foreigners,” said Park.

In the past, Park's company employed 50. Now only 30 people are working there.

Many in the younger generation would rather be jobless than take jobs they consider beneath them.

Higher levels of education are one cause, along with a perceived gap between the desirability of a job at a large company and one at an SME.

According to a Ministry of Employment and Labor report released last month, companies with five or more employees were looking for 804,000 workers in the third quarter of 2021. Only 690,000 jobs were filled.

It was the largest number of job openings since 2011.

When compared to the same period a year ago, the number of openings increased 76.9 percent, or by 50,000.

Vacancies were particularly high at smaller companies.

Among the vacant positions, 91.6 percent were in companies with fewer than 300 employees.

Nearly a quarter of the companies struggling to fill jobs said their working conditions didn't meet the expectations of many job seekers.

Last year, the number of new hires by SMEs fell below 90 percent of all newly employed for the first time since data started being compiled in its current form in 2004.

Despite the unfilled jobs, the employment rate for people with junior college degrees or above dropped to its lowest level since 2011.

Data released by the Ministry of Education last month showed that only 312,430 people who graduated from a two-year college or better since 2020 were able to get jobs out of a total of 480,149.

That's a 65.1 percent rate, the lowest in a decade.

Young applicants prefer to work for big companies, public institutions or in government departments.

They consider the pay, welfare and social status of working at SMEs to be inferior.

Some want to avoid manual work, such as at factories.

According to the Korea Economic Research Institute, 69.8 percent of Koreans between the ages of 25 and 34 have a college degree, the highest level among 37 OECD member countries.

The corresponding ratio in the U.S. is 51.9 percent, in France 49.4 percent and in Germany 34.9 percent.

Additionally, young Koreans prefer to work in Seoul or neighboring Gyeonggi while many SMEs are outside that area.

"Due to increases in the minimum wage, the pay at SMEs is relatively low [compared to part-time jobs]," said Yoon Dong-yeol, a business professor at Konkuk University. "Many [young people] prefer to work part-time within the Seoul metropolitan area rather than work at an SME outside.

Another problem for SMEs is a lack of transport infrastructure that would allow young people to commute.

Yoon said rural areas with SMEs should be better connected to major cities, forming a kind of single economic bloc.

Mr. Kim, 29, worked for a small company for two years but quit in October.

Kim said he had to work for the small company because he didn't get any better offers after graduating.

"But because of a lack of systems [at the SME], I felt as though I couldn't learn anything," Kim said.

Low wages were a problem, but so was the massive workload.

Kim is now studying to apply for a job at a state-owned company.

According to a Statistics Korea report last year, the average monthly paycheck of an employee working for a conglomerate was 5.15 million won. Those working for SMEs averaged 2.45 million won.

Experts say there is a need to fundamentally change the labor environment and the educational structure to solve this hiring problem at SMEs.

The wage gap with conglomerates must be narrowed and working environments improved.

Some argue it is equally important to create a social atmosphere in which manual labor is respected.

“Over half of the workforce at SMEs are people with high school diplomas or less," said Noh Min-sun, a researcher of Korea Small Business Institute. "This is especially true in manufacturing."

Noh said career programs that put a person on a path from a specialized high school to an SME and offer more training later should be created.

"Only when the manufacturing workforce is respected can a virtuous cycle be created where companies' productivity improves through the longevity [of its employees]," Noh said.

BY JEONG JIN-HO [shin.hanee@joongang.co.kr]