South Korea Shuns Moms at Peril as Workforce Shrinks

With a master’s degree from South Korea’s Yonsei University and a resume that includes a role as a consultant for Dublin-based Accenture Plc (ACN), Yoon Kyung is coming to terms with her retirement. She’s 37.

“It was a choice between a job and baby,” she says, explaining that no one would hire her after five years away from the office raising her daughter. “I really want to go back to work but there is no place that I can go.”

The failure of South Korea, one of the world’s fastest- aging societies, to tackle a shrinking labor pool threatens to undermine growth and lessen the nation’s odds of producing the next Samsung Electronics Co. or Hyundai Motor Co. (005380) Only half of women aged 15 years or older were working last year and the participation of females with higher education is the lowest among the 34 members of the Organization for Cooperation and Economic Development.

“The choice for women between a job and family is still stark,” said Kim Tae Hong, research director at the state-run Korea Women’s Development Institute in Seoul. “Policies alone can’t change the people’s long-held belief that mom is fully responsible for child care.”

South Korea’s working-age population will begin to contract by 2016, curbing growth by as much as 1.7 percentage points to 2.5 percent by 2050, Royal Bank of Scotland Group Plc said in a June 13 report.

Getting mothers back into the workforce would help offset the declines, RBS said. If South Korea could reach the same level as the U.K. in employing women, potential growth and GDP per capita growth could be boosted by 0.3 percentage points by 2050, the bank said. In a May report the OECD asked whether women were the key to furthering the country’s economic “miracle.”

‘Fair Opportunity’

“Government measures to put women to work have been far from satisfactory,” said Kim Jae Won, an economist at Samsung Economic Research Institute. “South Korea needs measures to enforce and monitor affirmative action programs and to check up on companies to see if they are really providing fair opportunity for promotions.”

Female labor participation is lagging even as Park Geun Hye, the former leader of the New Frontier Party, has emerged as front-runner to become the country’s first woman president. Park, the daughter of former dictator Park Chung Hee, has topped opinion polls for 12 weeks and may announce her candidacy as early as this week, according to party officials.

Free Child Care

President Lee Myung Bak’s government has tried to encourage women to stay at work with measures that this year included free day care for all children up to two years old. The changes are the latest in a series of efforts to promote equality that date back to a 1987 Equal Opportunity Law. A 2006 law required public and private companies with more than 1,000 workers to promote gender equality, a threshold lowered to 500 workers in 2008.

Still, labor-participation rates haven’t changed in two decades, according to the OECD. While women in OECD countries earned on average 16 percent less than men in 2010, in South Korea the figure was 39 percent lower.

“In the past, Korea’s growing working population has contributed to strong economic growth,” the OECD said in its report. “Korea will need to use its human capital more effectively to face the challenge of a potentially dwindling pool of paid and unpaid workers in a country which traditionally has experienced little immigration.”

Part of the problem is that government measures have been inconsistent, with eligibility for benefits such as day care shifting with administrations, said Kim at the Samsung Economic Research Institute.

Illegal Preferences

Another reason is that some companies have gender preferences, said Anthony Modrich, country manager in South Korea for the London-based recruitment agency Robert Walters.

“We sometimes have difficulty finding jobs for skilled women,” he said, without naming the firms involved. “Korea is unusual in that companies still specifically demand male workers.”

It’s illegal in South Korea to seek only male or female workers for a job, said Yim Young Mi, director of women’s employment policy at the Ministry of Employment and Labor.

“The law to protect female workers is in place,” Yim said. “Enforcement is another issue.”

The failure to counter such preferences is reflected in high-level corporate positions. The aggregate percentage of women in South Korean boardrooms is just 1.9 percent, according to a March report by New York-based GMI Ratings, which conducts independent corporate-governance research. That’s compared with 12.6 percent in the U.S. and 36.3 percent in Norway.

Overnight Work

Yoon, who lives in a luxury apartment building overlooking the Han River in Seoul, says that the demands of her job meant she couldn’t go back to work even though she and her husband could afford private day care or a nanny.

“My job demanded frequent overnight work, business trips and intensive study,” she says. “There was no middle ground.”

As South Korea’s birthrate fell to 1.15 in 2009 from 6 children per woman in 1960, the female education level rose. Now, women have similar education and job opportunities at the entry level as men, said the labor ministry’s Yim.

“The real problem starts when married women have babies,” she said. “The traditional Confucian culture still dominates people’s perception that child care is entirely mom’s job.”

That pressure from society is something Hwang Soon Yi can understand. Hwang, who lives in Seoul, worked as a manager in a post office while her two children were infants. She changed her mind about staying in full-time employment when her eldest daughter reached elementary school.

Other Mothers

“She cried every day as other moms took their kids to school and waited for them in front,” Hwang said. “So I decided to take child care leave although that could mean losing out on a promotion.”

Now Hwang, 38, said she may not go back to work at all. “Everyone in my family was unhappy when I worked,” she said.

Women made up a bigger part of South Korea’s workforce in the 1960s and 1970s when they worked in sweatshops making shoes and garments, according to Kim Tae Hong at the Women’s Development Institute. Their numbers dwindled as the economy shifted to heavy industries and then to high technology, while other manufacturers have moved overseas to tap cheaper labor, he said.

South Korea’s birthrate fell below two children per fertile women in the early 1980s. The north Asian nation is now the world’s fastest-aging country, RBS said, citing data compiled from its own sources and the United Nations.

Aging Workers

South Korea isn’t alone in grappling with an aging workforce. Labor pools are predicted to decline by more than 10 percent in the next 20 years in Germany and Japan, according to the OECD.

In Japan, women’s participation in the labor force has begun to increase as workers become scarcer. Forty-two percent of people employed in Japan in 2010 were women, the highest share since the Labor Ministry made comparable data available in 1973, when the figure was 38.5 percent. South Korea is projected to have the world’s second-oldest society in 2050, behind Japan, according to the OECD.

For Kang Seong In, the choice in South Korea is clear. She’s worked for KT Corp. (030200), a telecommunications service company, since 1996 and now heads a branch office of 14 workers in Seoul’s financial district.

“I can’t imagine how married women with babies are surviving in their careers,” said Kang, 41, who attends two or three business dinners a month with clients and other drinking events with employees. “I could not have made it up so far if I were a mom.”

To contact the reporter on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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