lower than that of U.S. in 1991, but higher than that of Japan in 1990. To note is the rapid increase in information and knowledge occupations. Especially, the employment share of professionals has expanded significantly due to the increase in computer and engineering professionals.
Polarization of occupational structure is one of the frequently pointed out changes that are entailed by the deepening of the information age.
Occupations are disintegrating into skilled or unskilled and, as a result, higher-skilled and lower-skilled jobs increase concurrently while medium-skilled jobs shrink. Simple and repetitive work is substituted by computers and automated machines, and jobs are created for managers and professionals because value-added activities mostly result from R&D, planning, and management. Although, the increase in higher-skilled occupations is evident in many countries, there exist opposing opinions about the increase in unskilled occupations.
<Table 1-8> Comparison of Information Related Occupations by Country (Unit: person) Korea
Year
1990 1995 2000 U.S.A (1991)
Japan (1990)
Professionals 7.4 10.5 13.3 16.9 11.1
Managers 2.1 4.3 5.2 12.8 3.8
Total 9.6 14.8 18.5 29.7 14.9
Source: Korea Information Society Development Institute, The Change of Occupational Structure with the Advancement of Knowledge & the Information Era, 2002.
MISMATCH BETWEEN HUMAN RESOURCES
The seriousness of youth unemployment is related to higher education and the number of unemployed college graduates has increased from 85 thousand in 1991 to 145 thousand in 2004, which is an annual increase of 4.2% for the period.
The rapid expansion of higher education resulted in higher expectations of obtaining decent jobs, but the rate of creation of decent jobs driven by labor demand could not accommodate the rapidly increasing labor supply for those jobs. The upward trend in youth unemployment in Korea is likely to continue for the time being, as the rate of expansion of higher education would outpace the rate of creation of decent jobs. For example, restructuring is progressing toward labor saving industries such as the IT industry.
The cause of youth unemployment can be classified into three categories, skill mismatch, job mismatch, and labor turnover. First, skill mismatch is defined as the discrepancy between the skills acquired by the applicants and the skills required by firms. Fierce competition and the rapidly changing business environment increases the demand for highly skilled workers, but the supply of skilled workers is hindered by the time lag for schools to adapt to new skill demands from the businesses. 6T sectors, which refer to IT-Information Technology, BT-Bio Technology, NT-Nano Technology, ET-Environmental Technology, ST-Space Technology, CT-Cultural Technology, and are strategically fostered by the Korean government, and ‘the Next Generation Growth Engines of Korea’ sectors are now experiencing a lack of labor supply with adequate skill levels.
Second, job mismatch results from a discrepancy in work conditions between labor supply and demand. In general, less popular jobs such as those in 3D (dangerous, difficult, and dirty) industries and small businesses are suffering from a lack of labor supply. Job mismatch results from limited labor supply, higher education, and population aging in the course of a highly advanced industrial structure.
Third, labor turnover could also be contributing to increased youth unemployment. The increase in labor turnover arising from frequent job quits by youth workers could cause manpower shortages for companies.
Especially, the increase in non-regular workers after the financial crisis in late 1997 led to less worker loyalty to companies and became the cause of frequent changes of occupation. In general, an increase in labor turnover increases unemployment, if other factors remain constant.
The Shortage of Science and Technology Manpower
The share and absolute number of students majoring in science in high school have been falling since the late 1990s. The student share of those majoring in science among third graders at general high school dropped from a peak of 47.2% in 1998 to 39.9% in 2003. Even worse, the share of science colleges preferred among total applicants has fallen from 45.7% in 1994 to 26.9% in 2003 and the absolute number of applicants has decreased by about 140 thousand persons.
Although the demand for science and technology manpower is increasing as the degree of dependency on knowledge for economic growth is increasing, the education system is not able to nurture highly skilled manpower in sufficient number. There exists a labor shortage in the IT and BT sectors despite the fact that there is a general labor oversupply of science and technology graduates.
For example, only 56.7% of graduates who majored in science and technology at college found employment in 2002. The proportion of students majoring in science and technology is higher in Korea than in OECD countries, but the quality gap of the students is serious. Especially, many of outstanding students expected to major in science and technology have changed their paths in order to become doctors, lawyers, and civil servants for better job stability and income opportunities.
There is an urgent need to change the human resources development system into a demand-oriented one, as the discrepancy in skill contents between business and school is widening. Together with this measure, it is important to resolve the problem of skills mismatch to pave the way for self-directed learning for employed workers in order to provide increased opportunity for compensation and promotion according to performance and ability.
Labor Shortage and Utilization of Foreign Workforce
According to the Labor Demand Survey by the Ministry of Labor, manpower shortage rates have shown long-term diminishing trends, but the degree of manpower shortage is different depending on firm size and occupation.
Manpower shortage is especially severe in small and medium enterprises.
For instance, the manpower shortage rate in small and medium enterprises
fell from 4.6% in 1994 to its lowest level of 0.87% in 1998, but it gradually increased after 1998 to 2.9% in 2004. Manpower shortage is especially severe among blue-collar occupations in small and medium scale manufacturing, and it is spreading to the service industries such as construction, restaurants, cleaning, and healthcare.
Government policy to cope with the manpower shortage among small and medium scale manufacturing has focused on two measures, utilizing youth manpower through substitutional military service and foreign manpower. Utilizing youth manpower as substitutional military service is subdivided into industrial technician agents and special research agents according to the educational attainment of the youth. The agents are working at specified research institutes and/or industries instead of doing military service for a couple of years.
The Ministry of Labor introduced an employment permission system for foreign laborers in 2004 because the former industrial trainee system had lots of problems, such as the presence of illegal foreign employees and weak protection for foreign laborers. The number of unskilled foreign laborers in Korea recorded 37.4 thousand persons in February 2004, an increase from 250 thousand persons in 2000. The utilization of foreign laborers by firms is largely in response to the difficulty of securing manpower in the domestic labor market, a situation that accounts for firms’
strong intention to continue utilizing foreign laborers in the future. In this respect, they proposed necessary measures to systemize the utilization of foreign laborers as follows.
First, the utilization of foreign laborers should be minimized as much as possible so as not to infringe on job opportunities for domestic laborers.
Because youths with only high school diplomas and unskilled elder workers attempting to secure a job could be easily disadvantaged by the increase in foreign laborers, it is necessary not only to protect job opportunities for these people but also to develop their vocational capabilities. Second, the utilization of foreign laborers should not hinder the restructuring process of industry. It is undesirable for economic growth to maintain declining industries, which should otherwise be closed down, with the help of the low wages of foreign laborers. So, the utilization of foreign laborers should be permitted only within restricted industries.