Labour market barriers confronting women

It is difficult for Korean women to combine their family responsibilities with good careers. These difficulties are reflected in the high gender pay gap of 38% (Figure 3.8). They also help to explain why one-third of women hold temporary work contracts and only 8% have supervisory responsibilities. The difficulties women encounter in accessing good jobs also discourages their participation in the labour market, although this effect is somewhat masked in the overall employment rate due to later retirement in Korea than in most other OECD countries. As a result, the 53% overall employment rate for Korean women is only moderately below the OECD average value of 57%. The barriers preventing many women from realising their full productive potential at work appear to have a particularly large impact on the participation decisions of the most educated women. Whereas the 2010 employment rate for Korean women who have not finished upper secondary education is 12 percentage points above the OECD average (58% versus 46%), it is 17 percentage points below the OECD average for women who have a tertiary degree (62% versus 79%).35 This represents a costly underutilisation of human capital which could become a major drag on economic growth as population ageing causes potential labour supply to shrink.

Labour market duality is an important source of the difficulties that women face in reconciling working and family life. The human resource practices of large Korean employers vis-a-vis their regular workers provide little flexibility for workers attempting to combine active involvement in parenting and other family care responsibilities with successful careers. In particular, career progression is typically dependent on maintaining an uninterrupted employment relationship and being available to work long hours. A woman wishing to temporarily drop out of the labour force following childbirth is likely to pay a large price in terms of lost earnings capacity and opportunities for career advancement. Indeed, she may be able to return only to low-paid, non-regular employment. Since this is not a very attractive prospect, women who wish to pursue a career often decide to remain in regular employment and have no children. Another way many mothers reconcile parental responsibilities and careers in other OECD countries is to temporarily switch to a part-time schedule on the same job and then to return to full-time work when their children are older. This solution typically has not been available to Korean women, since part-time work is almost de facto non-regular work that pays poorly and offers little opportunity for career advancement. Breaking down labour market dualism - for example, by making the remuneration system more performance-based and work schedules more flexible for regular workers - would make it possible for many more women to meet their families’ needs while enjoying successful careers and contributing more fully to the national economy.

Figure 3.15 shows that the trend increase in female employment since 1980 has been associated with a very steep decline in fertility in Korea. While the 15 percentage point increase in the female employment rate (ages 25-54) between 1980 and 2009 was fairly typical of the increases observed among the 21 OECD countries with data for both years, the decline in the Korean fertility rate from 2.8 to 1.2 was larger than in any other country. The only country that came close to seeing such a large decrease in fertility was Ireland (a 1.2 percentage point decrease versus the 1.7 percentage point decrease in Korea), but this left Ireland still having one of the highest fertility rates in the OECD area (2.1), whereas Korea now has the lowest fertility rate (1.2). The 1980-2009 increase in the female employment rate was also more than twice as large in Ireland as in Korea. Another indication that rising female employment appears to have proven particularly difficult to combine with fertility in Korea is that a number of countries, including Australia, Sweden, the United Kingdom and the United States, have actually experienced increases in fertility since 1980, even as female employment increased. The difficulty Korean women encounter in reconciling motherhood and work is also underlined by recent work by the Hyundai Research Institute (2010) which shows that Korean parents have on average 0.76 fewer children than they would like to have.

Figure 3.15. Female employment and total fertility rates, 1980 and 2009a

a) The Y-axis scale is 1.0 to 3.5 for total fertility rate in 1980, and 1.0 to 2.2 in 2009. The X-axis scale is 30 to 80% for female employment rate in 1980, and 50 to 90% in 2009.

Source: OECD Family Database 2012, www.oecd.org/els/social/family/database.

Figure 3.16 provides more direct evidence that the family responsibilities borne by Korean women limit their participation in paid employment. Panel A of this figure shows that - charting participation rates by age for Korean women generates an M-shaped profile: participation rises to a first peak as the school-to-work transition is completed, declines during the main child rearing years, rises to a second peak as the children become older and women return to the labour market, and then declines a second time as women retire. No other OECD country shows this pattern because mothers in the prime child-bearing years do not withdraw from the labour market in sufficient numbers to cause participation rates for women in their thirties to fall below those for women in their twenties. Panel B of Figure 3.16 provides a more detailed look at how marriage and childbirth affect the labour market status of Korean women. Prior to marriage, 87% of women are employed, but the employment rate falls to 61% after marriage. Significant additional declines are registered after the births of the first and second child.

Figure 3.16. Changes in labour market status of women with age and family status

a) The 2007 survey samples for marriage, birth of a first child and a second child are not necessarily identical.

Source: OECD Online Employment Database (www.oecd.org/employment/database), for Panel A; and Kim, J. (2011, Table 4), “Women’s Career Disconnect and Reentry into the Labor Market”, in K. Bae (ed.), Labor Issues in Korea 2010, Korea Labor Institute, Seoul, for Panel B.

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