With youth unemployment near a 15-year high and the government planning to raise the retirement age, intergenerational conflict over jobs is rising in South Korea.
The jobless rate for workers aged 15 to 29 touched 11 percent earlier this year and is about four times higher than for those aged 40 and above. At the other end of the spectrum, Korea has an underdeveloped pension system and the highest elderly poverty rate in the OECD, as companies push employees in their fifties into early retirement to contain costs.
An overall unemployment rate that’s close to the 10-year average belies the difficulty facing policy makers seeking to balance the needs of the young and the old as society ages and economic growth eases after the heady gains of previous decades.
Working longer would have helped Lee Jong Ho, 59, who retired from Korea Railroad Corp. two years ago and has been looking for another job ever since. Lee’s 2.2 million won ($1,970) monthly pension isn’t enough to support him and his wife, after pouring savings into raising their children.
“Healthy people like me should work at least until 70 given that the average life span of people now is easily over 80,” said Lee. “I know that extending the retirement age could mean fewer jobs for young people. I’m willing to get paid a little less if I can keep working.”
While currently there is no official retirement age in South Korea, a typical worker’s career ends around 53, government data show. After that, many try to get by on a combination of pension payments, savings, part-time work or small business ventures.
A new law taking effect next year mandates that large companies allow employees to work until at least 60.
Kang Jin Ho, an English major at Hankuk University of Foreign Studies in Seoul, is 26 and still trying to get into the workforce. He’s deferred graduating for years to maximize his employment chances, as many companies limit new entry hires to people still in school. Kang’s applied for more than 70 jobs already in 2015 and has been rejected every time.
“Getting a job was so much easier for my parents’ generation, when the economy was expanding fast,” he said. “The average age of job seekers in my study group is 30.”
Projections from the Organization for Economic Co-operation and Development paint a gloomy picture for Kang and the next generation of students who will follow. The number of people 65 and older in Korea will surge from 11 percent in 2010 to more than 37 percent by 2050, according to the OECD.
The unemployment rate for those aged 15 to 29 was 9.3 percent in May, Statistics Korea said Wednesday. That’s the highest figure for May in official data going back to June 1999, and compares with 2.7 percent for people 40-49 and 2.6 percent for the 50-59 group. Young people are also seeking stable jobs and many apply for the civil service exam, which pushes up the youth unemployment rate, said Sim Won Bo, director at Statistics Korea.
President Park Geun Hye’s government will next month announce its fourth set of measures in two years to help ease unemployment among the young.
Previous efforts have included improvements to career training at school and incentives for young people to join small- and medium-sized enterprises, not just the large corporate icons that dominate the public imagination.
This time around the government may begin addressing the problems faced by Lee and Kang at the same time.
According to a finance ministry statement in May, financial support could be offered to companies that keep on older workers, while trimming their wages and using the savings to hire more young employees. The ministry didn’t offer further details.
Labor unions have already voiced opposition to the idea of a peak-wage system, which also runs counter to cultural traditions of basing pay on tenure and age, rather than performance.
“In a rapidly aging society with weak growth momentum, you’re going to get conflict between young and old over how to divide economic benefits,” said Lee Geun Tae, an economist at the LG Economic Research Institute in Seoul. “Young people having proper jobs is important for our growth engine, but there doesn’t seem to be an easy solution.”
For more, read this QuickTake: Retirement Redesigned