Young and old Koreans suffer as job market drives inequality

[TOKYO] South Korea's 3.6 per cent unemployment rate, while enviable on the surface, masks a two-tier labour market that is fuelling inequality and stirring anger and resentment.

No wonder then that South Korean President Moon Jae-In has emphasised jobs and wages during the recent election campaign and in his first month in office, describing pay and wealth disparities as obstacles to the creation of an "economic democracy".

About a third of all Koreans in the labour force are relegated to "non-regular" status, holding temporary, often part-time jobs that pay about half as much as permanent ones and come with few benefits such as social insurance.

Breaking down that divide is essential to reducing the high level of income inequality in South Korea, the International Monetary Fund said in a March report.

Younger Koreans may have it the worst. Youth unemployment reached a record high last year before slipping to 9.3 per cent in May. But that figure also tells only part of the story.

Nearly half of those who are newly employed hold non-regular jobs, and the jobless rate among college graduates in their 20s is more than triple the overall rate.

Twenty-something Koreans now refer to themselves wryly as the "sam-po generation," meaning they've given up on three pillars of life - relationships, marriage and having children - because of their limited career prospects. Their frustrations have helped fuel a growing generational divide.

Yet older Korean workers face their own struggles. Many are forced into "retirement" in their early or mid-50s as their compensation peaks, but relatively few have significant retirement savings. So they take temporary, lower-paying positions that usually lack benefits. Koreans over 66 are the poorest in that age group among 30 OECD nations surveyed.

Mr Moon has stressed the importance of turning non-regular positions into regular ones, saying he would usher in an era of "zero non-regular employees".

During the campaign he also promised to create 810,000 jobs in the public sector, and his government has already submitted a 11.2 trillion won (S$13.7 billion) supplementary budget projected to create 110,000 jobs directly and indirectly.

Mr Moon intends to keep a close eye on the job market. In the first days of his presidency he installed two large digital monitors on the wall in his office. They display key employment indicators.

BLOOMBERG