[Market Economy Op-Ed] It Is Time to Seek Shared Growth with Young People

The reality facing young people in South Korea is extremely harsh. One in four spends an extra year or two preparing to retake the college entrance exam because getting into university is so difficult, and even after graduating, many must spend years as repeat job seekers. Even then, landing a job at all is a matter of luck. It is said that as many as 750,000 young people have given up looking for work altogether and are simply resting because there are no suitable jobs available.

These young people are called the “N-po generation.” The term describes the pitiable reality of a generation forced to give up countless things—dating, marriage, childbirth, homeownership, and human relationships, and ultimately even their dreams and future. The government says it has spent 380 trillion won to address the low birthrate problem, yet the total fertility rate remains stuck at 0.7 for this very reason. Young people whose very survival is under threat simply do not have the room to think about marriage and childbirth.

The fundamental cause of the problem is the severe shortage of good jobs. Young people want jobs at large companies, where pay is higher and benefits are better. Large firms are also the kind of workplaces where it is easier to take maternity leave and parental leave. Yet these high-quality jobs account for only 13.9% of all jobs, one of the lowest levels among OECD countries. Compared with 48% in the United States, 41% in Germany, and 30% in Japan, South Korea does not even reach half the level of advanced countries.

Why are there so few large-company jobs that young people want? In South Korea, regulations based on company size are applied excessively, creating a structure in which it is difficult for small and medium-sized enterprises to grow into medium-sized or large firms. Once assets exceed 2 trillion won, restrictions are imposed on the appointment of outside directors, and the installation of an audit committee becomes mandatory. Once assets exceed 5 trillion won, companies become subject to disclosure obligations and various regulations under the Fair Trade Act. For business groups with assets exceeding 10 trillion won, mutual and circular shareholding is prohibited, and restrictions are imposed on debt guarantees and the voting rights of financial and insurance affiliates. These step-by-step regulations reduce companies’ incentives to grow into large firms.

Regulations rooted in anti-business sentiment also place a considerable burden on large companies. Taxes such as inheritance tax and corporate tax are heavy, and labor regulations such as the Serious Accidents Punishment Act and the Yellow Envelope Act continue to proliferate, making it harder to hire workers. In the end, large firms find it difficult both to expand their scale and to hire new employees. Because there are too few large-company jobs, young people are pouring enormous amounts of energy into studying for the CSAT and preparing for employment, instead of driving innovation and pursuing their own growth. This is regrettable both at the individual level and at the national level.

Overprotecting small and medium-sized enterprises is also contributing to the disappearance of good jobs. Our society has, as a matter of policy, emphasized coexistence between large firms and SMEs and the survival of small neighborhood businesses, while pushing large firms out of the market. Representative examples include systems such as “business types suitable for SMEs” and “livelihood-suitable business types,” centered on the Win-Win Growth Commission. SMEs, rather than strengthening their competitiveness, have settled into reliance on policy protection, while medium-sized firms, fearing regulation, hesitate to grow into large corporations. It is no exaggeration to say that this has pushed the Korean economy to the brink of shared stagnation.

The South Korean economy must pursue shared growth with its young people. By protecting companies chosen by consumers and firms with strong competitiveness, we must create jobs and inject vitality into the economy. If large companies continue to be unilaterally forced into “shared growth” as they are now, the creation of quality jobs and the future of young people will become even more precarious. If people can obtain well-paying jobs with good benefits without necessarily graduating from a prestigious university, then problems such as low birthrates, education, and regional extinction can also be resolved naturally. Before it is too late, now is the time to begin pursuing coexistence with the future of young people.

Eun-kyung Kwak, Secretary General, Center for Free Enterprise (CFE)

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Original title: [시장경제칼럼] 이제는 청년과의 동반성장을 모색해야 할 때

Author: Eun-kyung Kwak

Date: 2024-11-04

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=27002