Young S. Korean grads struggle to find permanent jobs

University students fill in documents at an employment fair in Seoul, South Korea. The country's rigid labour market is increasingly seen as a drag on an ailing economy.
University students fill in documents at an employment fair in Seoul, South Korea. The country's rigid labour market is increasingly seen as a drag on an ailing economy.PHOTO: REUTERS

But President Park's bid to revamp rigid labour laws faces opposition

SEOUL • In the past year, Ms Kim Yoon Sung applied to about 120 companies for a job, and could not land even one.

Instead, the 26-year-old South Korean is on her fourth outsourcing contract. She is one of tens of thousands of young graduates struggling to get regular employment in Asia's fourth-largest economy.

"It's become normal for people in my generation to fail, even after writing applications to well over 100 companies," Ms Kim said. "The situation is just getting tougher."

South Korea's rigid labour market is increasingly seen as a drag on an ailing economy, prompting President Park Geun Hye to push a revamp in labour laws that would be the biggest in nearly two decades.

Ms Park wants to make it easier for companies to fire underperformers, base wages on merit, shorten work hours, ease outsourcing rules and expand unemployment insurance. The reforms will change the system of stable employment and seniority-based remuneration that was enforced by the unions, and underpinned South Korea's breakneck economic growth into the 1990s.

Her ruling party hopes to push labour reform legislation through the current session of Parliament ending in December, but faces opposition from some unions and the main rival party.

However, the conglomerates that have driven South Korea's emergence as an industrial power support more flexible labour laws.

"This is the first time in many years that we are trying to do something to change a problem that is getting ever more serious," said Dr Kim Dong One, the dean of Korea University Business School.

In an economy dominated by companies like Samsung Electronics and Hyundai Motor, limited labour flexibility makes it harder to build up the service sector.

The Korean Confederation of Trade Unions, the more strident of two big labour umbrella groups, says the reforms would hurt job security and wages, and destroy collective bargaining. It has vowed to oppose all ruling party candidates at parliamentary elections due next April.

On Wednesday, it called a nationwide strike and held a rally in Seoul that drew thousands, with some protesters scuffling with police.

The opposition, New Politics Alliance for Democracy (NPAD), is demanding that any change in labour laws be tied to requiring firms to share more profits and increase employment.

With just 47 per cent of parliamentary seats, the opposition cannot by itself block law changes, although the NPAD holds the chairmanship of a key committee that would review law revisions.

The government is betting that enough voters are discouraged by their job prospects to make it worth pushing the legislation ahead of the parliamentary elections.

The last time South Korea made major changes to labour rules was in 1998, when it enabled companies to lay off workers under emergency circumstances, in exchange for a bailout from the International Monetary Fund.

At 22 per cent, the share of temporary workers in South Korea is double the OECD average. Non-permanent workers are also falling further behind on wages, earning 54 per cent of what regular employees earn for similar work in South Korea, compared with 65 per cent in 2004, government data shows.

Youth unemployment hit a 16-year high early this year, and could worsen as the retirement age begins to rise next year.

Ms Kim, who studied Chinese language and literature, earns about 1.2 million won (S$1,400) a month in her temporary job, roughly half the average starting salary for staff positions at Korean firms.

She said she has lowered her expectations: "I am no longer looking at big companies, but just hope to get an opportunity at any company doing business with China."

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 25, 2015, with the headline 'Young S. Korean grads struggle to find permanent jobs'. Print Edition | Subscribe