Female Labor-Market Dropouts in Korea

Young-Ock Kim

Korean Women’s Development Institute

1

Global Human Resources Forum 2014 Track C, Session 1, Creating Jobs for Women Seoul, November 6, 9:00~10:30

Contents

Ⅰ. Unique Phenomenon of Korean Women’s

Labor Market

Ⅱ. Status of Female Labor Market Dropouts

Ⅲ. Social Costs of Female Labor Market Dropouts

Ⅳ. How to Address Female Labor Market

Dropouts

[Figure 1] Employment Rate of 2013 (25~54 aged)

Source: Data extracted from OECD.Stat

78.1 76.3 78.6 70.8

61.8 53.2

78.4 81.6 82.8 75.2

69.3

83.9 85.2 87.9 91.7

87.8 90.3 86.4 86.5 88.0 86.7

82.8

Female Male

Introduction

Women represent a large pool of untapped labor in Korean economy.

• This paper examines the phenomenon of female labor-market dropouts, often called as career interruptions.

• The first part shows how unique this is in Korean labor market.

• The second part analyzes the quantity of these women and their status with empirical data.

• The third part outlines social costs of career interruptions.

• The final part identifies effective policy measures to prevent dropouts (to retain mothers in the labor force) and to assist women reenter the labor market.

Introduction

[Figure 2] Trend of Female Economic Participation Rate(1963~2013)

y = 0.2877x + 37.238

0.0

10.0

20.0

30.0

40.0

50.0

60.0

I. Unique Phenomenon of Korean WLM

Source: KOSIS Data Base

Women’s employment rate has stagnated since 2000.

[Figure 3] Advance Rate of Graduates from High School to College/University (1985~2013)

34.1 32.4

49.8

65.4

80.8 82.2 83.5

82.4 80.5

74.3 74.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

1985 1990 1995 2000 2005 2007 2008 2009 2010 2012 2013

Female

Male

Korean women’s educational attainments have increased and there is little difference between man and women in the advance rate to the tertiary school.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

47.3

53.7

25~29 years, 68.0%

40~49 years, 64.6%

50~54 years, 63.1%

30~34 years, 56.7%

35~39 years, 54.4%

[Figure 4] Trend of Female Employment Rate of Specific Age Groups (2000~2013)

Source: KOSIS Data Base

The lowest employment rate was shown in the age group of 35~39 years old in 2013. This age group showed a decreasing trend.

[Figure 5] Employment Rates of Women by Age Groups(2000, 2013)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+

2000 2013

Source: KOSIS Data Base

The phenomenon of female labor market dropouts has remained unchanged.

[Figure 6] Employment Rates of Women by Age Groups (2013)

Source: Data extracted from OECD.Stat

The M-shaped curve is clearly shown in Korea.

20.0

30.0

40.0

50.0

60.0

70.0

80.0

20-24세 25-29세 30-34세 35-39세 40-44세 45-49세 50-54세 55-59세 60-64세

High school University graduated(4 years)

[Figure 7] Women’s Economic Participation Rates by Educational Levels in 2013

Source: 2013 Survey on Economic Active Population, Raw Data.

The loss of female talent from the labor force is even sharper among highly educated women.

[Figure 8] Size and Reasons of Women’s Career Breaks(2013)

Source: NSO, “Statistics of Women’s Career Breaks in 2013”.

Married women aged 15~54, 9,713,000

Not employed, 4,063,000 (41.8%)

Women with career breaks,

1,955,000 (20.1%)

Marriage, 898,000 (45.9%)

Pregnancy & child birth,

414,000 (21.2%)

Child care, 571,000 (29.2%)

Child education,

72,000 (3.7%)

II.Status of Female Dropouts

[Period of quitting a job] [Service period of the job

before career breaks]

Classification (thousand

persons) % Classification

(thousand

persons) %

Less than 1 year 187 9.6 Less than 1 year 303 15.5

1～3 years 257 13.1 1～3 years 813 41.6

3～5 years 290 14.8 3～5 years 420 21.5

5～10 years 462 23.6 5～10 years 333 17.0

10～20 years 528 27.0 10～20 years 81 4.1

20 years or more 231 11.8 20 years or more 5 0.3

Total 1,955 100.0 Total 1,955 100.0

Source: NSO, “Statistics of Women’s Career Breaks in 2013” based on 2013 Local Area Labor Force Survey.

62.4% of women have more than 5 years of career-interruption period.

78.6% of women had worked less than 5 years before career breaks.

[Figure 9] Changes in the Distribution of Job Sectors after Career Breaks(2013)

33.9

17 12.3

2.8 7.5

4.2 3.1 4.3 3.9 2.2 3.3 5.4

16.8 20.9

14.7 10.7 9.2

6.7 1.7 1.8 1.8 1.9

4.8 8.9

Occupations before breaks Occupations after breaks

III.Social Costs of Female Dropouts

Source: Ministry of Gender Equality & Family, “Survey on Women with Career Interruptions in 2013”.

Many women find jobs in lower position of occupational hierarchy after career breaks.

Occupations re-employed are often insecure and downgraded.

[Figure 10] Changes in the Distribution of Occupations after Career Breaks (2013)

0.1

23.7

39.4

4.8

10.1

0.1

8.5 7.9 5.3

0.4

24.8

16.4 12.3

24.7

0.3

5.1 5.2

10.8

Occupations before breaks Occupations after breaks

The proportion of women clerical workers decreased from 39.4% to 16.4%, while the proportion of women in sales & services increased 2.5 times (14.9%→37%).

[Figure 11] Changes of the Establishments Sizes after Career Breaks

20.0 16.1 17.4 17.0

13.1

4.5

9.5

2.4

42.9

13.7 17.3

14.4

6.4

1.6 1.9 1.8

1~4 5~9 10~29 30~9 100~299 300~499 500+ D.K.

Occupations before breaks Occupations after breaks

Before the breaks, 20.0% of women had worked in the small establishments of ‘1~4 employees.’ With career breaks this ratio increased more than 2 times (42.9%).

The ratio of workers in the establishments employing more than 100 persons decreased from 27.1% to 9.9%.

[Figure 12] Changes of Employment Status after Career Breaks(2013)

87.2

58.6

12.9

41.4

Regular workers Temporary, daily

Occupations before breaks Occupations after breaks

Women’s career breaks also make a significant change in the employment status.

The ratio of working as regular workers decreased (87.2%→58.6%), while more women entered the labor market as temporary or daily workers (12.9%→41.4%).

[Figure 13] Career Interruptions and Subsequent Decline of Earnings

Women workers without breaks Women workers with breaks

2,040,000

1,496,000

548 thousand won

Monthly wage before

breaks

Monthly wage after

breaks

1,440,000

1,219,000

221 thousand won

Kim, Jong-Sook(2011) tried to estimate wage penalties for career interruptions, analyzing 1st through 11th wave of Korea Labor and Income Panel Study (KLIPS).

As a parametric approach, Heckman's sample selection model and least square results show that the loss is 11% to 19% of previous income or wages. Education, previous income, and duration of interruption significantly influence the amount of loss.

Also, Propensity Score Matching (PSM) is utilized as non parametric method. It pairs samples by similar characteristics in order to resolve sample selection bias. The results show that the loss of career interruptions is 22%. Age, education level, duration of interruption are also critical in the amount of loss.

Aggregation of Income Loss

Cho, Sun-Ju et al.(2014) estimated the social costs of women’s career interruptions. The sample was restricted to the women who experienced career interruptions during the period of 2000~2012. First, the wages of career interrupted women are estimated, using Heckman two-stage estimation model.

Next, the estimated wage loss were applied to the total number of career interrupted women. Total income loss of women non-returners is estimated as 59,000 billion won. Total income loss of women returners is estimated as 29,000 billion won.

Aggregation of these income losses is estimated as 88,000 billion won in total 13 years and 6,830 billion won annually.

Other Social Costs

Household side : Depending on a sole income earner may lead the instability of family income under the global financial crisis which happens periodically. In the low-growth Korean economy of recent years, a single job cannot easily support a middle-income family, especially in the face of rising costs for housing and education.

Firm side : Loss of women’s talents may lead to the low competitiveness of Korean firms.

Government side : Female labor market dropouts lead to the lack of tax revenue.

IV. How to Address Female Dropouts

The results of this study surly confirm that the women’s career discontinuity is wreaking havoc on the utilization of human resources.

Aware of the gravity of the situation, the government has implemented active labor market policies for career interrupted women such as job training and job placement services, but progress has been slow.

This study suggests to focus on the initiatives supporting ①career maintenance ②prompt reentering the labor market and ③work family compatibility.

Initiatives to support career maintenance, that is, career interruption prevention services

It is almost impossible for women to restore previous job prestige after breaks.

Employers are not certain for the skill and know-how of career interrupted workers.

Thus more efforts should be put to develop and deliver the services helping career pursuing.

"Seoul Working Mothers Support Center" which was established in April, 2012 is one of such centers which is providing prevention services for potential career interruptions.

Seoul Working Mothers Support Center

• Provide comprehensive consulting/information for dealing

with three main difficulties of working mothers (workplace,

family relations, and individual)

• Provide Support/education to prevent career interruption

• Child care services for working mothers

One Stop Support

based on the needs

of working mothers

• On/offline communities of working mothers /

Mom’s cafe

• Education programs for empowerment of working

mothers

Empowerment of

working mothers

• Education programs for employers to change work

environment

• Campaign to improve the perspective on work &

family life balance

Social campaigns

for work-family

balance

Services facilitating quick returning The returnship, conceived by Goldman Sachs in 2008 is

intended to draw experienced professionals (‘off-ramper‘ often mothers who took an extended break from the workforce) to a company for 8 to 12 weeks. The idea is to quickly get these workers past the stigma of a long hiatus and prepare them to move back into full-time positions.

Pilot schemes have been launched in London with major investment banks such as Credit Suisse (10 weeks program ‘Real Returns’) and Morgan Stanley.

Other practices: Returnship Program (Sara Lee), return-to-work program (Daphne Jackson Memorial Fellowships Trust), ‘New Directions’(Pace Law School), Return to Work Conference (iRelaunch).

Korea: CJ Returnship (full- time part-time), Return Mom Barista (Starbucks Korea).

Customized Reemployment Support Career interrupted women are not homogeneous, and rather they are diverse in terms of human capital, family situations, and the experience of career interruptions, which leading to different policy needs. Ministry of Gender Equality and Family has funded reemployment support centers called “New Occupation Center.” 121 Centers are in operation as of 2014.

25

Job Counseling

• Counseling career path

• Vocational aptitude tests

• Registration on the Job

Information Net

Vocational Training

• Work ethic education

• Job training

• Acquiring Certificates

Employment Support

• Providing job vacancy

information

• Accompany job interview

services

• Job placement & internship

• Follow-up care after

employment

Three Functions of “New Occupation Center”

Further Work-Life Balance Schemes

• There should be more effort to retain mothers in the labor force with accomodations such as long and paid maternity, parental leaves, flexible working arrangements and childcare services.

• The long working hours expected by Korean employers also make it difficult for two parents to work full time and it is the woman who inevitably stays home, where she takes on the full-time work of managing her child’s education. When women do eventually return to the labor force, it is often in part-time and/or low-skill work, regardless of education and previous experience.

• In Korea working hours have been decreased, but still many persons work long hours.

But still long working hours…

27

[Figure 14] Trend of Average Annual Hours Actually Worked per Worker : Total Employment

2,677

2,488

2,346 2,246

2,187 2,090

1,877 1,766 1,776

1990 19911992 19931994 1995 1996 19971998 1999 20002001 20022003 20042005 20062007200820092010 2011

Korea

OECD

Source : OECD, http://stats.oecd.org/

And work-life balance ???

28

Workplace flexibility can be in terms of when one work, where one work, or how much one work.

Workplace flexibility generally refers to arrangements such as flexible hours and provision of computers to facilitate telecommuting that allow workers to continue making productive contributions to the workforce while also attending to family and other responsibilities.

According to Korea Establishment Survey on Work-Life Balance of 2013, 25.7% of firms (5 employees and more) adopted at least one practice.

Flexibility in the Scheduling of Hours 〉Flexibility in the Place of Work

12.5%

7.6% 8.8%

2.7% 1.9% 2.4%

1.5% 1.4%

Part-time Flex-time Flexible

working hours

Compressed

working week

Discretionary

work

Mobile work Work-at-home Telework

Source: Korea Establishment Survey on Work-Life Balance 2013

[Figure 15] Percent of Firms Offering Selected Workplace Flexibility by Type

Less Workplace Flexibility Compared to EU

Country

(EU 15)

64.0% Country

(EU 15)

48.0%

Korea

12.5% Korea

7.6%

Part-time Flex-time

Source:

- Korea Establishment Survey on Work-Life Balance 2013.

- European Foundation for the Improvement of Living and Working

Conditions(2006), Establishment Survey on Working Time and Work-

Life Balance(ESWT 2004/2005).

B S.E, Exp(B)

female ratio(manager) .012**** .003 1.012

female ratio(worker) .010*** .003 1.010

trade union .571*** .202 1.769

size1(10~29) .641*** .241 1.898

size2(30~99) .921**** .251 2.512

size3(100~299) .921*** .288 2.512

size4(300+) 1.496**** .314 4.464

ind1(construction) .246 .301 1.279

ind2(retail, restaurant) .796*** .260 2.217

ind3(electric, communication) 1.154**** .258 3.171

ind4(social service) .568** .257 1.765

constant -3.113**** .284 .044

Probability of adopting flexibility arrangements is higher, • When higher female ratio among workers • When more female managers • When trade union exists • In non-manufacturing • In large businesses(base=5~9 employees)

In sum, Korea needs a series of initiatives that will enable women to work up to their capabilities, even after the birth of a child. This will mean flexible work schedules, more generous maternity benefits, and prioritized access to child care and after-school care.

Solutions should continue to be identified and delineated referring many models from Sweden, the Netherlands, and other advanced economies for how to bring mothers into the labor force and create better work-life balance.