Korea's emerging fault lines

By John Burton

On May Day, I was quietly munching my Big Mac at a McDonald’s on the edge of Insa-dong when a group of about 50 shouting young protesters burst into the restaurant to demand higher wages and better working conditions for part-time workers. At least three busloads of police soon followed and stand-off developed before the protesters dispersed.

The small incident underscores the growing anxiety of those between their late teens and early 30s feel about their future job prospects when companies, symbolized by McDonald’s, are increasingly employing part-time workers instead of salary staff to keep wage costs low. Reduced job opportunities for the young are also causing increased tensions with the older generation.

This development is not just confined to Korea. Similar worries afflict the young in the U.S. where it is increasingly difficult to find a good job with strong career prospects. One major reason for this is that globalization, of which Korea has been among the biggest winners, has also caused companies to outsource jobs, creating less labor demand in home markets.

The irony is that the young in both Korea and the U.S. are probably the best educated generation in history and they normally would be looking forward to a productive future. Instead, the youth unemployment rate in Korea stands at around 9 percent, which is nearly triple the overall unemployment rate of 3.4 percent.

The difficulty of finding a good job is taking a personal toll. A recent survey by Jobkorea, a job portal operator, revealed that nearly 40 percent of young Koreans were ready to forego marriage and 33 percent to have children, while 30 percent have given up on the idea of owning a home. Their greatest fear is that if they do not get a secure career by their early 30s, they are condemned to live a life less comfortable than that of their parents.

This is having a damaging effect on Korean society. Young Koreans are becoming disenchanted and angry because they feel that working hard and being diligent are no longer enough to secure a good future. Moreover, the increased pessimism results in fewer and later marriages and declining birthrates, which poses a demographic challenge to Korea.

Even with the lack of good job opportunities, the young are expected to take care of what soon will be one of the world’s fastest aging populations, the result of not only sluggish birthrates but longer life expectancy and low immigration. With the postwar baby-boom generation nearing retirement, this will place huge burdens on pension and health care systems.

Korea’s current welfare system is inadequate in responding to the challenge, with social spending the lowest among the other developed economies of the OECD. Current programs, such as the National Pension Service, are still relatively underdeveloped.

To a large extent, the two major parties have largely avoided tackling the issue head-on, with both suggesting that welfare benefits will be increased while avoiding the issue of how much taxes would need to be raised to do so. Korea ranks 28th among the 30 OECD countries in terms of taxation as a percentage of gross domestic product, so while Koreans are receiving less benefits, they are paying less taxes. Any tax increase will require social consensus.

Will Korea’s young population rebel at the prospect of supporting bigger government benefits and higher taxes and will they decide to turn their back on the old? So far, the young have ducked this debate about age-related government spending because of their apparent political apathy. Voter turnout among young Koreans is half that of people in their 60s and 70s.

But they will have to confront the challenge sooner or later, particularly since Korea’s economic prospects are becoming ever gloomier. Bigger welfare programs depend on economic growth, but growth is slowing.

In the end, it will be responsibility of the young to chart their future. The best hope would be to change Korea’s economic model from one relying on the chaebol to creating a more entrepreneurial culture. This also depends on a restructuring of the education system that rewards independent thinking instead of rewarding those who pass standardized tests.

But change will come only if the young demand it. So far, many still prefer to take the safe route of seeking jobs with the government or Samsung or LG instead of striking out at their own. The young must also recognize the importance of engaging in politics instead of leaving it up to politicians to decide their future.

There are plenty of grounds for cynicism about the political process, but growing fears that Korea is losing its competitiveness should persuade the young to take center stage before it is too late. It was their parents, after all, who ushered in Korea’s democratic revolution in the 1980s. Korea’s present-day youth should show the same commitment to demanding reforms. Protesting at McDonald’s is not enough.

John Burton, a former Korea correspondent for the Financial Times, is now a Seoul-based independent journalist and media consultant. He can be reached at john. burton@insightcomms.com.