Permanent Jobs Disappear from South Korea

Before the financial crisis of 1997-98 in East Asia, there was no word in the Korean language for “irregular worker” – workers with no guarantees of job security or promotion, working on short-term contracts.

Permanent jobs were the norm until the tumult of the late 1990s (invariably referred to as “the IMF crisis” by South Koreans) set in motion changes in the nature of employment that are now jeopardizing the country’s middle class and social cohesion.

Prior to the crisis, South Korean workers were organized in militant trade unions. Under the Trade Union Law, only one union was allowed per workplace and laying off workers was almost impossible. In the crisis’s wake, a tripartite agreement was reached between the IMF, trade unions and debt-ridden businesses to amend labor laws to make hiring and firing more responsive to changes in the market. The chaebol, Korea’s giant conglomerates, adopted “worker flexibility” as a mantra.

Now the employment situation, particularly among the young, may be at the root of the political changes shaking South Korea. Recently dubbed the 2030 Generation in accordance with the South Korean tendency to give political movements quirky names made up of numbers, voters aged in their 20s and 30s recently turned Seoul politics on its head by rejecting the two main parties and electing Park Won-soon, a progressive independent, as mayor of Seoul, one of South Korea’s most powerful political positions.

Many voters voiced dissatisfaction with the country’s traditional forms of leadership and an interest in a new style of public leadership. President Lee Myung-bak, once the chief executive officer of Hyundai Engineering & Construction, is regarded as a close friend of the chaebol. Another independent, software tycoon Ahn Chul-soo, is rumored to be planning a run for the presidency next year. The results of a poll released by the Chosun Ilbo newspaper on September 7 found that 41.5 percent of respondents supported Ahn, while 40.7 backed the Grand National Party’s Park Geun-hye, who had been the frontrunner.

According to a report released on Oct. 24 by the Korea Labor Institute, there are now 5.69 million non-regular workers in South Korea, accounting for 33.4 percent of the country’s 17.05 million workers. By contrast, in 2001, 17 percent of South Korea’s workers were irregular. Figures released on October 28 by Statistics Korea show that there the number of irregular workers has grown by 5.4 percent growth from 2010. The rise in the number of irregular workers has been accelerating, rising at over twice the rate of regular workers.

Since recovering from the crises of 1997-98 and 2008, South Korea has continued its impressive pace of development, growing to become Asia’s fourth largest economy. Also growing, however, is an alarming array of social troubles, including a uniquely high rate of suicide, the highest in the 32-country Organization for Economic Cooperation and Development. An average of 42 people kill themselves every day, according to government figures. In addition, the country’s total fertility rate, at 1.28 births per woman, is among the lowest in the world. Internet addiction and depression are also very high.

South Korean couples often can’t afford the skyrocketing cost of educating children, which also became a campaign issue in the Oct. 26 election. There is a strong culture of shame that leads those unable to find decent work to withdraw from social life and become isolated. This situation leaves some South Koreans stuck in a kind of extended adolescence.

“In the Korean context, if you only have an unstable job, it affects your general life condition. If they don’t have a stable job, as many college graduates don’t, they can’t date, they can’t marry, they can’t form a family. That can make them deeply frustrated and angry,” said Hagen Koo, Professor of Sociology at the University of Hawaii.

Although South Korea is often praised for the country’s quick ascension from poverty to wealth, as its international profile grows, citizens are finding it increasingly difficult to achieve any kind of social mobility.

South Korea’s two basic methods of social mobility have traditionally been education and entrepreneurship. Both have got more difficult with huge increases in the price of education and a tougher business climate for small and medium sized enterprises.

"Although the economic environment for the corporations and the businesses in Korea is great, the economic situation for small business and the low middle class has been at its worst in the past few years," Hyun Jae-ho of Korea University told Reuters in an Oct 31 report.

Many of the stable, well-paying jobs in South Korea have in the past come from the country’s chaebol. Even though they are earning well, the largest are hiring fewer employees than ever. A study published in early April 2011 by the Hankyoreh newspaper showed a 73 percent rise in conglomerate profits alongside 10 percent growth in employment and 1.3 percent growth in workers’ income under the Lee administration.

So while there is growth in South Korea, it is making its way into few households. According to UBS Investment Research, wages in South Korea are growing at 2 percent and are negative when adjusted for inflation.

Rising food and energy costs are straining household budgets. As middle class budgets are being stretched, debt in South Korea has reached 150 percent of disposable income, as South Koreans borrow to keep pace with the lifestyles of the better-off and pay large sums to educate their kids.

The OECD’s Employment Outlook 2011 found that of the 21 countries studied, South Korea’s tax transfer system did the least to ease the burden on low-income workers whose buying power has been weakened due to lower real wages.

“The middle class itself is becoming internally divided between a very small, very affluent segment and the rest of the middle class. When the rest of the middle class compare themselves with these upper-middle class people, they naturally wonder whether they still belong to the middle class or not,” Professor Koo of the University of Hawaii told Asia Sentinel.

When a new government takes over South Korea’s government next year, one of its most important tasks will be to address the issue of employment. South Korea has fared pretty well over these past few years of global economic turmoil. In order for that to continue, the stabilization of South Korea’s job market will likely rank high on the next president’s agenda.