Photographer: SeongJoon Cho/Bloomberg

Gender Inequality Is a Risk for South Korea's Workforce

Women in their thirties drop out of the labor market in huge numbers

South Korea is at a demographic tipping point that’s making it even more important to address the gender inequality that’s discouraging millions of women from working.

With the nation’s workforce projected to begin a steady decline after peaking this year, the gap between the labor force participation rate for women (53.1 percent) and men (74.5 percent), looks like a critical weak point for the economy.

Newly elected President Moon Jae-in acknowledged the issue when he urged parliament to approve his plan for an extra budget that includes training for women returning to work after maternity leave and funding to help women with start-up companies.

“The discontinuity in women’s careers is a loss for the nation,” he told lawmakers on June 12.

The drop in the female participation rate is severe for women in their thirties as they marry and have children, and too few of them return to employment after family life settles down.

"There are some real difficulties,” said Chung Hyun-back, who is Moon’s pick as Gender Equality Minister. The problem for women “comes from the difficulty of maintaining work-family balance.”

If Chung’s appointment is finalized, she’ll be the fourth woman among 17 ministers nominated by the president. He’s still well short of an ultimate goal of having women occupy half of ministerial positions.

There’s also a big issue with the quality of jobs held by women, with too many of them in non-regular positions, which means temporary and part-time jobs that typically come with lower wages. This in turn reduces their incentive to remain in the workforce.

Women exceeded men in numbers of new college graduates in 2016, according to data from the Korean Educational Development Institute. This helps put them ahead their twenties, when compulsory military service interrupts men, before things change in their thirties.

Chung’s predecessor at the Gender Equality Ministry noted that women run up against entrenched practices that disadvantage mothers by often judging people on the hours they put in rather than their skill and productivity.

While the law prohibits employers using gender-based pay scales, in practice, they often end up earning a lot less than men.

While Moon makes efforts to better balance his ministers, the board rooms of corporate Korea remain a male domain. Only 2.5 percent of board seats in the nation are held by women, a ratio that ranked it second-last in a Deloitte survey of 44 countries.

“A first step to cracking the ceiling could be to implement measures that make raising children easier, with more accessible child care options,” Kim Young Sam, a partner at Deloitte Korea, said in the survey report. "Men also have an important role to play in promoting and advocating for gender equality in the boardroom."

    Before it's here, it's on the Bloomberg Terminal.