Employment rates have a critical impact on economic conditions and the growth of each nation and therefore determine social stability in the present and the future.
One proposed premise seems simple enough: deregulation can improve economic conditions and allow companies to increase revenue and create more jobs.
However, this is easier said than done. Germany, for example, despite being the strongest economy in Europe, resorted to cutting the working week to four days for many employees in order to ensure that jobs can be shared among more people.
The German economy thrived during the global financial crisis of 2008 unlike in countries such as France and Britain. This was not from employment policy alone, but it certainly played a powerful role in making Germany stronger than ever.
Consider Korea then. The government and companies here are preparing to extend the retirement age to 60 in 2016, which must be delightful news for aging workers.
On the other hand, a survey conducted by the Federation of Korean Industries of 181 member firms that employ more than 300 people each showed that 72.4 percent of them are planning to freeze new hires from the second half of next year due to rising manpower costs.
As it is, unemployment among youths ― those aged between 15 and 29 ― is extremely high at 10.9 percent as of February of this year. The overall unemployment rate has fallen to a manageable level, mostly under pressure from the government, but such policies cannot and must not last forever. There has to be more constructive ways of ensuring a sustainable employment model.
The study by the FKI also showed that extending the retirement age will increase wages by an average of 25 percent. Even if a peak-wage system ― under which aging employees receive less compensation ― kicks in, it will only have the effect of cutting labor costs by 7.5 percent.
The malign effect extending retirement will have on youth employment is significant.
However, an increasing number of retirees in their 50s are starting up their own businesses ― up 15.4 percent in the first nine months of this year ― much more than 4.7 percent among those under 39.
This mirrors a trend in the United States. President Barack Obama has introduced initiatives to provide more opportunities for retirees to use their skills and experience in existing companies or startups.
At the same time, unemployment in the U.S. fell to 5.8 percent in November, down sharply from 7.0 percent in the early part of the year, making the economic prospects bright for America next year despite the drag in global conditions.
Instead of introducing policies that serve as populism at best, the Korean government and corporations should come up with long-term ways to create more sustainable conditions for both aging and young workers here.