Polarized job market

Reducing dualism in labor market urgent

The January job data is both encouraging and discouraging. The increase of 530,000 new jobs is the highest in 20 months. For four straight months, monthly payrolls have increased by more than 400,000. The rise is eye-catching amid the 3-percent-range growth rate. Korea still has many jobs. The question is the mismatch of supply and demand in the labor market.

Polarization characterizes the job market.

Positions are rising for the old but are stagnant or falling for the young.

Manufacturing jobs are shrinking against the rising service-sector. Quality positions are scarce although many low-end jobs are still available. The number of irregular workers has increased while regular employment is stagnant. Jobs for college graduates are scant but openings for high-school graduates are rising. Conglomerates have few openings, against small- and medium-sized firms clamoring about the labor shortage.

The jobs for those aged 50 and above jumped by 590,000 while for those below 30, shrank by 70,000. Those over 65 found 135,000 jobs, accounting for 25 percent of the new jobs in January.

About 190,000 self-employed, most of them retired baby boomers, opened shops last month. About 6.6 million people are self-employed, 2.2 million above the optimal number. Most of them are running small-scale restaurants, retail, wholesale business and barber and beauty shops.

Many of the retirees use severance pay and take out loans to begin businesses. They run the risk of bankruptcy as less than 10 percent of them open shops without adequate startup training.

Young people are choosy about employment. They shun the dirty, dangerous and difficult jobs. Small-scale manufacturers call for importing additional foreign workers to run factories. More than two million reported they took a rest before seeking work. They are potentially jobless. About 515,000 20-somethings say they are still preparing for work, up 27.3 percent.

About 110,000 manufacturing jobs have disappeared in a year. This suggests automation has reduced workers. For the fifth consecutive month, manufacturing jobs have fallen.

In the low-end job market fit for high school graduates, recruiters compete to hire workers. College graduates face difficulty in finding positions at high-paying companies, however.

The youth jobless rate is 7.6 percent, more than double the unemployment rate of 3.4 percent. Young jobseekers are reluctant to lower employment expectations.

Labor market dualism in Korea awaits reform. The share of non-regular workers, accounting for one-third of employees, is double the OECD average. The service sector has contributed to increasing jobs but it is less than half the manufacturing industry in productivity.

Policymakers need to reduce the imbalance between supply and demand in the labor market. Fostering small- and medium-sized companies is vital for additional job openings. Curbing the oversupply of college graduates will help ease the scarcity of blue collar workers.

Policy initiatives to develop new growth engines and encourage entrepreneurship will lead to additional quality jobs.