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On December 3, 1997, then-Deputy Prime Minister Lim Chang-Yeol announces that the International Monetary Fund (IMF) bailout agreement for South Korea has been concluded. From left, Lee Kyung-sik, then-Governor of the Bank of Korea, Deputy Prime Minister Lim, and Michel Camdessus, then-Managing Director of the International Monetary Fund. (Hankyoreh Archive)
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Government jobs offer stability and generous retirement benefits not found at private companies
“Shim Sang-min,” 31, applied last July for jobs as a full-time insurance company employee and an intern at a public institution. He successfully passed the screening process for both. The public institution job stipulated he had to work as an intern for three months before being converted to regular status, with a possibility that he could be eliminated. Indeed, one of the seven interns hired with him was cut. Even if he did gain a permanent position, his salary would be two-thirds what the insurance company paid, and he would have to travel down to the provinces, where he had no connections. Yet Sim opted for the public institution. “You’ve got a retirement [at 60] guaranteed as long as there are no major incidents. A lot of people talk about how it’s tough to make it past 50 at a big company,” he said. “The lifespans are supposed to be even shorter in insurance.” One of the biggest scars left on South Korean society by the Asian financial crisis of 1997 was the loss of dynamism. People no longer want to tackle the risk of entering new markets or new fields – the memories of company bankruptcies and unemployment in the crisis’s wake are too deeply engraved. An average of over 3,000 establishments a month closed their doors between Dec. 1997 and Apr. 1998, or more than double the previous rate. The unemployment rate soared to a historic high of 7.7% in July 1998, but only one in four fired workers received unemployment benefits. The dual labor market structure has become more entrenched in the last 20 years. Pay gaps have grown by the day between large and small businesses and between regular and irregular workers. As a result, a large percentage of workers struggle with insecure employment and low wages. Meanwhile, the social safety net is weaker than for other OECD member nations. With the number of “decent jobs” stagnant and the social safety net being deployed at a slow rate, signs all around point to a desperate struggle not to be left behind in a harsh reality. “Nam Seung-hoon,” a 25-year-old currently preparing for the Level 9 civil service exam, long dreamed of becoming a clinical counselor. His choice was motivated by witnessing the suicide of a close friend who suffered from depression. “I would have had to earn a master’s degree and go through another three years of training [to achieve the dream]. And after 10 years of study, the starting salary is in the low 20 million won range,” Nam said. Nam, whose family finances are not strong enough to support him through long years of study, opted to follow the trend, setting his sights on the secure position of government employee. Another 25-year-old, “Ham Su-hyeon,” also began preparing for the Level 7 civil service examination after completing his military service. “The pay is stable, and there’s none of the long hours of work or intense competition,” Han said. “Also, government employees don’t lose their jobs unless the Republic of Korea goes under. There’s a good pension system, so you don’t worry about retirement.” Fears of being forced out of the workplace have spurred a trend of young people preparing for exams to enter the teaching field or for employment as a government employee in general service or at Level 5 or higher. A Korea Labor Institute report on the characteristics of unemployed young South Koreans by family income level showed a total of 281,000 unemployed graduates last year (including the non-economically active), or 21.2%, falling into the exam preparation category. Nearly seven out of ten unemployed young people with a bachelor’s degree or higher – 68.7% - were studying for one of the exams. A general climate of growing uncertainty about future income has led to a trend of reduced consumption and increased savings, experts said. The anxieties are also apparent in real estate investment trends. “Choi Min-su,” a 43-year-old department chief at a large corporation, went into debt last May building a four-story multifamily dwelling. He and his wife and three children live on the top floor, which measures 40 pyeong (132 square meters); the other three floors are rented out. The first floor was designed for commercial spaces, the second and third for two-room apartments. “The children are still young, and we wanted a detached home where they could run around, but we’re worried about retirement,” Choi said. “It’ll be tough for me to keep working at the company if I don’t make executive. Even if I make it to 55, the future after that doesn’t look good.” Global Political Economic Institute researcher Park Hyeong-joon explained, “While the earnings from real estate investment have gone up, the amount of money earned as an irregular worker or small-scale mom-and-pop business has basically remained stuck in place.” Hana Institute of Finance senior research fellow Jang Bo-hyeong said, “The financial world loans that had mainly gone to companies found an alternative after the IMF crisis in loans to households, but with the government and households turning to rising real estate prices to make up the stagnation in income, the result has been a serious rise in household debt.” By Jung Eun-joo and Heo Seung, staff reporters Please direct questions or comments to [english@hani.co.kr]
