Gap Years

Seoul Rush-Hour Subway / Credit: Marcelo Druck

Seoul Rush-Hour Subway / Credit: Marcelo Druck

To many Americans in my generation, “regular employment” seems an alien concept. More would likely bristle at the notion of “permanent employment,” a term — in the U.S. — evoking golden handcuffs at best and endless drudgery at worst. We like to fancy ourselves free to rocket after opportunities as we see fit. Stability, if it factors into our equation at all, often registers after fulfillment.

And so it might be tempting look at the lost generation in Japan or the employment struggles of youth in France and consider them foreign phenomena. The idea that you get one chance, and only one, to lock in a life-long career is understandably frightening. In a couple Financial Times articles, the reporters document the perpetual economic limbo of Japanese males who could not become salarymen, and the tribulations of smart (and perhaps overqualified) French who bounce between temporary contracts.

In South Korea, the divide between a “regular” worker and a “non-regular” one is stark, as explained well by Nathan Park in this WSJ blog. The result is a decidedly stratified labor market. People who might otherwise be fired aren’t, and older folks hold the lion’s share of the secure jobs. Young graduates, meanwhile, are marginalized. They can’t get steady jobs, have little to no benefits, and end up delaying marriage and living with their parents well past 30.

Now that doesn’t seem so alien at all.

There are peculiarities about Korea’s work environment. The social hierarchies and a seniority-based system for advancement are the norm (although at least the latter is changing). There are surely other differences in France and Japan. But for well-educated young people post-2008 crisis, I would argue the work situations are converging. It seems just as true in the U.S. that, if you cannot secure that first foothold right after college and begin demonstrating a clear career trajectory, you may “boomerang” and have your own personal lost decade.

The Korean government’s solution to this is labor reform through what’s called a “salary peak system.” Its Ministry of Employment & Labor explains there are several ways this can work: maintain retirement age while reducing salary; retire and then rehire at a reduced salary; or reduced work hours (for, of course, reduced pay). The idea seems to be to free up capital for companies to hire new workers rather than pay for those on their way out. The system is being implemented across state-run institutions already. Hyundai Motor has said it will introduce such a system next year.

It’s easy to see why some see this as just shoving the old folks aside, punishing those who have worked all their lives, or as assigning blame to unions who have built up “regular” worker protections. No Kwang-pyo, director of the Korea Labor & Society Institute, takes a critical view of the move and assigns blame to Korea’s chaebol conglomerates for exploiting and locking in the stratified labor market. Any labor reform, he writes in an editorial, must be accompanied by a broader “economic democratization” that condemns the “greed” of the country’s industrial giants.

So what is the real source of the problem, and what’s the fix? The IMF last year recommended a much more mixed approach, by first dismantling the “relatively high degree” of protections for regular workers (thereby cutting the incentive to use non-regular ones); it posited that policies aimed at reducing exceedingly long working hours could sweeten this bitter medicine. After that, raising mandatory retirement age limits while “remodulating” the seniority-based wage system should be the next steps, it said. The IMF thinks improving protections for non-regular workers and broadening access to training wouldn’t be bad ideas either.

Conceptually at least, I think I might agree with these remedies. But I question the feasibility of all of this, and how it might really turn out. It’s hard not to ponder the drifting millenial Americans. The ability to compare between Korea and the States may be limited, but if thinning worker protections and benefits were really the way toward a more egalitarian economy, you might not have so much continued soul-searching in the U.S. right now.