South Koreans continue to work more than their counterparts in the Organization for Economic Cooperation and Development (OECD).
According to OECD data, South Koreans worked 1,915 hours last year, ranking sixth among the 38 OECD member nations. The number of hours was down 10.3% from 2011.
Korea’s long working hours relates the lowest fertility rate
South Korea also has the lowest fertility rate in the world and a fast-aging population. Concerns are ascending that the burden on the economy and the pension system might run out of funds in the coming decades.
Korea’s long working hours make it difficult for males to spend time with their newborn children. Women have to bear all the child-rearing responsibilities, and as long as this continues, it is hard to envision the fertility rate growing.
Local governments have set programs in place to encourage people to have children. They provide monetary handouts, assistance with fertility therapy, financial support with medical expenditures, and loans.
Nonetheless, as Korean lifestyles are dramatically changing, the share of single-person homes has exceeded 40% for the first time. In a country where half of the population now views marriage as not obligatory, the rate of weddings reached an all-time low of 193,000 last year. Some people, particularly women, prioritize personal independence and deliberately avoid marriage.
A Mismatch Between Education and The Labor Market
Furthermore, Korea’s education system does not meet the needs of a modern labor market and continues to deteriorate young people’s mental health. Korea has the highest proportion of college graduates in the industrialized world, and US President Joe Biden even has complemented its people’s educational zeal.
Even though the education system helped the country’s rebirth from the wreckage of war in the early 1950s to become a manufacturing powerhouse, Korea has the lowest labor productivity return on education investment in the Organization for Economic Cooperation and Development (OECD). The nation spends 40% more on a typical adolescent student than Ireland, yet earns 60% less in gross domestic product per employee.
Korea has the highest gap between labor-market demands and job skills in the industrialized world, with half of its university graduates working in jobs that have nothing to do with their degrees. Attending college also does not guarantee social mobility. Ironically, as the proportion of college graduates has increased, the probability of moving up the social ladder has decreased.
Increasing Income Inequality
As Korea’s core industries transition to knowledge-based ones, many inequalities, such as income disparity and digital gaps, emerge. Sharply declined productivity growth, significant private debt, and growing income and wealth inequality are all signs of macroeconomic imbalances.
The most noticeable feature of contemporary Korea is that income inequality, measured by the Gini coefficient, top income share, or poverty rate, is currently among the highest in the industrialized world. Inequality within a generation can influence children’s capacity to advance up the economic ladder compared to their parents, increasing the persistence of socioeconomic position between parents and their offspring.
The Great Gatsby Curve depicts the connection between wealth concentration in one generation and the capacity of the next generation to advance up the economic ladder compared to their parents. For example, an increasing scarcity of well-paying jobs due to slow growth motivates people to use their political influence, connections, and wealth to legitimately or unjustly circumvent due procedure and facilitate their children in gaining admission to reputable universities and landing good jobs.
Given the multi-year high youth unemployment rate amid the so-called overeducation phenomena, the younger generation’s despair and rage are evident, as summed up by their sarcastic phrase “Hell Chosun(Korea).”
Weak Small and Medium-sized Enterprise in Korea
According to the most recent OECD Structural Business Statistics database, small and medium firms (SMEs) with less than 249 workers in Korea have around 33.3 percent of the productivity of large enterprises with more than 250 employees. Except for Ireland (13.6%), this share is much lower than that of advanced economies, which ranges between 49.0 and 61.5 percent.
Korea’s 24.6 percent self-employment rate represents a fragmented services sector dominated by small and inefficient proprietors, ranking fifth in the OECD behind Mexico, Greece, Turkey, and Chile, and being more than twice as high as in advanced industrial nations. Furthermore, many self-employed proprietors are heavily indebted, with the debt-to-disposable income ratio for all self-employed reaching 222 percent in 2020.
Korea’s Tertiary Education System Must Change
Secondary school vocational education, which has diminished as alternative pathway to postsecondary education, should be strengthened to make it a direct road to work. Tertiary education should become more adaptable and sensitive to workforce needs. The active labor market should concentrate on job placement and training rather than direct job creation.
Many university graduates rely on informal education to get their first job, implying that institutions do not give the required skills to begin their careers. Furthermore, many corporations employ their own admission examinations, demonstrating a lack of confidence in the degree conferred by the educational system. The rapid expansion of Korean universities has come at some expense to quality.
Changing secondary education involves altering the university application process by reducing the significance of the College Scholastic Ability Test (CSAT), a major university admission exam administered once a year across the country. Around one-fifth of applicants take a year off from formal schooling to study for the exam a second time and get admission to a higher-ranked university. This school system shows Korean 15-year-olds have the lowest percentage of high life satisfaction and the second-highest share of low satisfaction among OECD nations.
Increasing career guidance and counseling is critical for improving students’ educational options and easing the transition from school to employment. One career teacher, at least, must be assigned to each primary, middle, and high school to increase student career counseling,
Furthermore, graduates of vocational education should be able to be hired right from high school, eliminating wasteful and unneeded rivalry for extra educational degrees. Despite the importance of Meister schools and the work-learning dual system, barely 3% of high school students attend a Meister school or engage in an apprenticeship program.