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Inequality in S. Korea High
World Economy

Inequality in S. Korea High

Social inequality in South Korea is higher than in countries that experienced systemic changes or economic crises, a researcher said.

Kim Tae-wan, a fellow at the South Korea Institute for Health and Social Affairs, said so in his paper titled “Analysis of the causes of social exclusion,” at an academic symposium at Seoul National University Thursday.

“Social exclusion” is a concept indicating the lack of employment, health and education, and the higher its percentage goes, the wider social inequality is. Kim estimated the index by taking into account the jobless rate, the employment rate, social expenditure and income inequality, comparing South Korea’s level with 21 OECD member nations that also announce related figures.

As a result, South Korea’s level of social exclusion was 34.6% as of 2010, higher than all the other 21 countries. It was even higher than Hungary (29%) and Poland (27.8%) that experienced systemic transition, and Greece (27.7%) and Ireland (27.3%) that suffered economic crises.

On the other hand, North European welfare states, such as Sweden (15%) and Finland (16.9%), showed social exclusion levels far below the average of 22%.

South Korea’s social expenditure was the lowest among the 22 countries, with 9%, falling far short of France’s 31% and way below the average 24.4%. The nation’s Gini coefficient, which shows the degree of social inequality, was 0.31, the eighth-highest. “In order to enhance social cohesion, South Korea should reduce income inequality, ease the jobless rate and expand welfare spending,” Kim said.

Another presenter pointed out the loopholes in laws to protect non-regular workers. Professor Geum Jae-ho of Korea University of Technology and Education said the current law that calls for converting non-regular workers to regular employees in two years of hiring them is ineffective, only aggravating labor market polarization.

“A comprehensive analysis, which took into account gender, age, academic backgrounds and unionization of workers, shows that the rate of conversion has even dropped since the introduction of the law to protect part-timers and contract workers,” Geum said. Specifically, the conversion rate was 1.3% between 2001 and 2007 but it fell to 0.8% in 2008-2014, he said.

The wage gap between regular and non-regular workers also widened. Male non-regular workers’ wages were 71.3% of regular workers’ wages in 2004 but the comparable portion fell to 63.2% in August 2014. That of female non-regular workers also dropped, from 88.4% to 75.9% of regular employees during the period.

Age also worked unfavorably for non-regular workers. As of August 2014, the wage of non-regular workers in their 20s was 77.9% of regular employees, but that of 50-something non-regular workers stood at only 58.5% of their regular counterparts, Prof. Geum said.

Caption

Labor market polarization exists in South Korea.

 

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