ed Plight of jobless youth

Policymakers must change perceptions about labor issues

Granted, youth unemployment is a global issue, and not unique to Korea. What sets this country apart from many others is the speed in which it is going from bad to worse ― as well as the wrong approach government and business officials are taking to address it, which in turn is based on their misperceptions.

The unemployment rate of young people (ages 15 to 29) stood at 8 percent in 2013, 3.7 times higher than the jobless rate of 2.16 percent for the older generation, the Bank of Korea (BOK) said Monday. The generation gap in jobless rates is far higher than the average gap of 2.1 times among OECD countries.

The youth unemployment rate has risen further to 10.2 percent in the first quarter of 2015, the highest in 16 years. Private economists note, however, the “real” jobless rate ― including the so-called NEETs, those who are neither in employment, education or training ― may be as high as 30 percent, meaning up to one third of the nation’s young people are drifting outside of the job market.

Deputy Prime Minister Choi Kyung-hwan was right when he said, “The government feels extremely sorry to our youngsters who cannot find jobs although they desperately want to work.” The economic czar of President Park Geun-hye then reiterated policy steps, including the additional hiring of public-sector workers such as teachers and nurses, and tax credits for businesses that employ workers. These are necessary steps to attract more of the idle work force back into the job market but hardly sufficient to turn the tide on this rapidly worsening problem. The government will announce these and other job-related measures next week ― about the 10th such policy package in 20 years ― but few are holding their breath for real change.

A more drastic, fundamental policy change is needed to turn around the situation, preceded by a paradigm shift among officials.

Nothing reveals better the government and business officials’ wrong, outdated understanding of youth unemployment than their attempted reinforcement of the “peak wage” system, which calls for reducing old workers’ wages and using the saved money for hiring young workers. This is too simple a concept, which brings to mind a now famous public-sector worker who volunteered to quit provided his son could work at his post. Businesses hire and fire workers depending on their demand for manpower. There are few reports that have plausibly proved the relationship between peak wages and increased youth employment.

Others say Korea’s job market should become more flexible, like the United States, to absorb more of the young, idle work force. They are forgetting Korea’s job security is the worst among major countries, as shown by the extremely short average work period of 5.6 years per job. What these pro-business analysts should watch in America instead is that 17 big U.S. companies, including Starbucks and Walmart, have recently decided to create 100,000 jobs for younger people. And how Japanese Prime Minister Shinzo Abe’s forceful rise in wages and domestic demand-boosting policies have led to a virtuous cycle of higher corporate earnings and near-full employment.

In the past 20 years, Korea’s economy has grown 20.9 percent but real wages of full-time workers increased only 6.1 percent, while those of temps fell by 2.8 percent. What politicians and bureaucrats must do is rack their brains on how to shift more of the fruits of growth from businesses to workers, young and old.