South Korea President Responds to High Youth Unemployment Rate

South Korea President Responds to High Youth Unemployment Rate
Photo Credit: AP/達志影像

What you need to know

The South Korea government’s prior mission will be to rebuild the labor market and promote economic growth.

Apple Daily reports, South Korea is suffering an economic downturn and youth unemployment rate is skyrocketing.

On August 6, the President of South Korea, Park Geun-hye, spoke on television regarding national policies and disclosed the four target reformations, including labor, public sector, education and finance. The government’s prior mission will be to rebuild the labor market and promote economic growth.

Park says, the current salary system emphasizes seniority rather than career performance. To establish a new system, the pubic sector will take the lead in implementing the peak wage system by the end of the year. Authorities will cut the salary of senior staff members who have already reached their maximum wage and guarantee their jobs until retirement. The rest of the money will be saved to hire more young people.

This year, South Korea will implement the peak wage system within the government and state-owned enterprises. It is estimated that 8,000 job opportunities will be created in two years.

Park calls on companies to apply the same system in order to alleviate the high unemployment rate. She also expects the new salary system to reflect on the career performance of employees more accurately, and that firms should recruit more full-time staff rather than part-time.

Park says full-time and high-salaried employees should give way to the younger generation to save the economy of South Korea. The series of policies is a must.

UDN reports, South Korean authorities have already extended the retirement age from 58 to 60 years old and will be implemented next year. Many people say a lower salary is acceptable if they can continue to work.

In order to reward businesses that implement the wage peak system, the South Korean government has drafted a three-year budget of around NT$ 33 billion (approximately US$ 9 hundred million). Whenever an SME employs a young adult as junior staff, the government will grant the company around NT$ 27 million (US$ 80 thousand). Large companies will receive half the amount of subsidy.

Park calls on the government, businesses and labor groups to form a committee and reach an agreement. The government will increase the amount of unemployment benefits from the current average salary of 50 percent to 60 percent, and people will have an extension of 30 days to collect the welfare.

Regarding the public sector reform, Park says the government will continue to promote the integration of functions to enhance the efficiency of public sectors. This will save the government KRW$1 trillion (approximately US$ 8.5 hundred million) in its annual budget.

Liberty Times reports, the economy of South Korea is falling into recession just like Taiwan. Its economic growth rate has been lower than four percent for four consecutive years. The unemployment rate for 15 to 29-year-olds was 10.2 percent in June, but the overall unemployment rate was only 3.9 percent. Park says that the unemployment situation will get worse for the children of baby boomers in the three to four years after they graduate from college.

Storm Media reports, the unemployment of young adults along with the inability to pay back student loans has led to the balance of student loans in South Korea to rise to $10.5 billion. The country has fallen into the same student loan crisis as the U.S.

South Korean finance researcher Jiang Zhong-man says that South Korea’s repayment provisions are more flexible than those of the U.S. People can start paying back once their salary reaches a standard. But as more and more graduates start extending their debts, the risk of them breaching their contracts also grows.

UDN reports, ever since Park took office, there hasn’t been much progress in the promises she made before the election and her opinion rate has fallen below forty percent. Since the MERS outbreak, South Korea’s second-quarter economic growth rate has dropped to the slowest in six years, forcing the government to develop an emergency plan and add supplementary budget.

As for education, Park announced that the exam-free semester program will be expanded next year. The program started in 2013 and enabled students learn through discussions, experiments, outdoor activities and teamwork.

Translated by June and Olivia Yang
Edited by Olivia Yang