Employment Outlook: South Korea
by Mary Anne Thompson
South Koreans enjoy an excellent education system and low unemployment, but there are employment issues looming – an aging population, a gender gap and talent shortages – that the country has plans to combat.
By Mary Anne Thompson, founder and president, Goinglobal, Inc.
South Korea enjoys consistently low unemployment, an educated workforce, and a remarkably high level of economic growth and prosperity under an increasingly democratic form of government. Unemployment currently stands at 3.4 percent, with its employment rate of people aged 15 to 74 at about 66 percent.
The country is a world leader in information technology and automobile production, and its growing chemical industry, particularly petrochemicals, accounts for a large segment of the country’s manufacturing sector. South Korea is home to Samsung, Hyundai and POSCO (Pohang Iron and Steel), one of the world’s largest steel makers.
Its strengths, plentiful though they are, cannot erase South Korea’s weaknesses. Although technically at peace with the Democratic People’s Republic of Korea (DPRK), South Korea’s relationship with North Korea is characterized by persistent discord. South Korea’s aging population means that by 2050 its workforce will likely decline 17 to 18 percent, according to the EIU (Economist Intelligence Unit). Despite this truth, the current reality is young people are having trouble finding work. The country continues to manage its weaknesses and capitalize on its strengths in hopes of fortifying an economically successful future.
Short Term Outlook
This year, about the same number of jobs are expected to be created as last year, though global economic uncertainties, weak domestic demand, delayed domestic labor market reforms and the extension of the minimum retirement age to 60 years old will moderate hiring activity.
The number of young people about to graduate and begin seeking jobs has increased, further stressing the labor market. In fact, the current labor market is one of the worst for recent graduates in many years. Even top candidates are having trouble landing a job, and competition is fierce.
Manufacturing jobs are among the hardest to find because of the current sluggish economy and restructuring in the shipbuilding industry.
The population of foreign nationals in South Korea’s workforce has been rising steadily, reaching about 960,000, up from 760,000 two years ago. Among them, about 437,000 work in manufacturing.
The government has efforts underway to attract professional workers from abroad by simplifying entry procedures and issuing multiple-entry visas, but these efforts are not as successful as hoped. Most of South Korea’s foreign workers are unskilled. Among professionals with working visas, about one-third are language instructors. A large number of those instructors are teaching English.
Chinese nationals of Korean descent account for the largest share of foreign workers (46 percent), with Vietnamese nationals a distant second.
Women in the Workplace
Although the gender gap in South Korea is narrowing, women are still underrepresented in the country’s workforce as a result of a number of factors, including lack of financial support for child care and education, and discrimination. The employment rate for women in their 20s is higher than that for men. But once women reach their 30s, their employment rate drops.
The government has introduced regulations to improve working conditions for women, including longer pre- and post-natal leave, paternity leave, child care leave and shorter working hours during pregnancy.
Almost one-quarter of employees in South Korea work on temporary contracts. Older Korean workers are the most likely to be temps.
Areas of Job Promise
South Korea continues to attract multinational corporations (MNCs), and foreign investment continues to increase, even in an uncertain global economy. As these MNCs increase their presence in South Korea, they and high-tech companies are likely to lead hiring activity this year. Some of the greatest demand is for bilingual candidates, where there is a talent shortage, according to global recruiting firm Robert Walters.
Experienced digital marketers, game developers and insurance actuaries are among the most highly sought professionals.
Where the Jobs Are
Seoul boasts 41 percent of job openings in South Korea, with most of those jobs in banking, insurance and finance.
Gyeonggi Province recently had about 25 percent of the country’s open positions.
In Ulsan and Gyeongsang Province, about a third of the jobs were in the automobile, shipping and steel industries.
Incheon and Chungcheong Province had the largest number of job openings in the electrical and semiconductor fields.
Skills in Demand
Candidates with expertise in their field, a proven record of success and good communication skills are highly sought, according to leading recruiting firms. Employers want candidates who are trustworthy, truthful, honest and confident. Global experience is prized.
Retiring leaders are not being replaced by new members of the workforce, leading to acute talent shortages in South Korea, according to executive search firm Heidrich & Struggles.
Country managers, regional managers and technical sales executives are especially in demand in the manufacturing sector.
In spite of its excellent educational system, the level of English proficiency in South Korea is quite low. As South Korea attracts more foreign investors and businesses work to grow internationally, competition is increasing for experienced bilingual professionals.
It is extremely important that foreign candidates speak Korean. Fluency in Korean indicates to hiring managers that the person will succeed in the Korean workplace.
General Salary Trends
The minimum wage has been raised to 6,410 KRW, an increase of about 7 percent. Salaried workers’ earnings averaged 32.81 million KRW last year, an increase of 1.5 percent over the previous year.
Large firms pay well, but there is a gender gap. Compensation in South Korea varies widely by company size. Last year, salaried employees at large companies earned an average of 65.44 million KRW annually; salaried workers at small and medium-sized companies earned 33.63 million KRW a year on average.
Salaries are likely to increase this year by an average 4.5 percent, according to advisory company Willis Towers Watson.
South Korea is slated to host the 2018 Winter Olympic Games in PyeongChang. The country’s preparation for this event brings jobs and the hope of an economic boost. South Korea has work to do in regards to equality for women in the workforce, more employment for young people and filling talent shortages. Its plans to strengthen these weaknesses show a country preparing for the long term, Olympics and all.