S Korea facing intergenerational conflict over jobs

SEOUL — With youth unemployment in South Korea near a 15-year high and the government planning to raise the retirement age, an intergenerational conflict over jobs is rising in the country.

The jobless rate for workers aged 15 to 29 touched 11 per cent earlier this year and is about four times higher than for those aged 40 and above.

Conversely, the nation has an underdeveloped pension system and the highest elderly poverty rate in the Organisation for Economic Co-operation and Development (OECD), as companies push employees in their 50s into early retirement to contain costs.

The main challenge for policymakers is to balance the needs of the young and the old as society ages and economic growth eases after the heady gains of previous decades.

Working longer would have helped Mr Lee Jong-ho, 59, who retired from Korea Railroad Corp two years ago and has been looking for another job ever since. His 2.2 million won (S$2,650) monthly pension is not enough to support him and his wife, after pouring their savings into raising their children.

“Healthy people like me should work at least until 70, given that the average lifespan of people now is easily over 80,” said Mr Lee.

“I know that extending the retirement age could mean fewer jobs for young people. I’m willing to get paid a little less if I can keep working.”

While there is currently no official retirement age in South Korea, a typical worker’s career ends at around 53, government data shows.

After that, many try to get by on a combination of pension payments, savings, part-time work or small business ventures. A new law taking effect next year mandates that large companies allow employees to work until at least 60.

Mr Kang Jin-ho, an English major at Hankuk University of Foreign Studies in Seoul, is 26 and still trying to get into the workforce.

He has deferred graduating for years to maximise his employment chances, as many companies limit new entry hires to people still in school. Mr Kang applied for more than 70 jobs this year and has been rejected every time.

“Getting a job was so much easier for my parents’ generation, when the economy was expanding fast,” he said. “The average age of job seekers in my study group is 30.”

President Park Geun-hye’s government will next month announce its fourth set of measures in two years to help ease unemployment among the young.

Previous efforts have included improvements to career training at school and incentives for young people to join small- and medium-sized enterprises, not only the large corporate icons that dominate the public imagination.

This time around, the government may begin addressing the problems faced by Mr Lee and Mr Kang by announcing last month that it would offer financial support to companies that keep on older workers while trimming their wages, and using the savings to hire more young employees.

“In a rapidly ageing society with weak growth momentum, you’re going to get conflict between young and old over how to divide economic benefits,” said Mr Lee Geun-tae, an economist at the LG Economic Research Institute in Seoul.

“Young people having proper jobs is important for our growth engine, but there doesn’t seem to be an easy solution.” BLOOMBERG