'Employment Rate of 70% is Unlikely to be Attained in Korea'

The Bank of Korea said on June 29 that the Korean government’s pledge for an employment rate of 70 percent would be likely to be a tall order even in the event of a successful labor market restructuring. The central bank mentioned the rapidly aging population and weakening economic growth potential as the reasons.

“Without a labor market reform, the employment rate would fall from 2017 as the number of those aged between 30 and 54 is on the decline and that of those aged 65 and older is on the rise to limit an increase in the number of the working population,” it explained in its report.

The central bank suggested neutral and optimistic forecasts in the report. The neutral one assumes that the current labor market structure is maintained as it is and the optimistic one is based on the assumption that Korea succeeds in labor market restructuring as Germany did.

According to the neutral prediction, the employment rate of those aged from 15 to 64 increases by 0.2 to 0.3 percentage points each year until 2020. The number is 0.4 to 0.5 percentage points in the optimistic prediction. Given that the employment rate was 65.3 percent last year, the rate for 2017 is estimated at 65.9 percent to 66.2 percent and 66.5 percent to 66.8 percent in respective cases. “In order to get a batter labor market, more chances should be provided for women in their thirties hoping to come back after childbirth, the pay divide between regular and non-regular employees should be addressed and the government needs to spend more on vocational training programs,” the central bank advised.