Starbucks stars as South Korea aims to boost jobs for women
Starbucks leads the way as the government vows to name and shame companies that slack off in terms of targets for females in the workforce
When former kindergarten teacher Kim Sun-sung tried to rejoin South Korea's workforce after five years raising her children, she found it tough. Then 41, Kim was either told she was too old or had been out of work for too long.
"It wasn't easy to find a decent job," said Kim, now 48 and working as a consultant at a Seoul private-study school. "I didn't want to end my life like that, with my expertise being wasted."
Park Geun-hye, the nation's first female president, is listening. Her administration has named and shamed companies including Hyundai Motor for not having enough part-time jobs for women, while praising Starbucks, Samsung Electronics and Lotte Group.
She's pledged to boost the participation rate of women in the workforce to 61.9 per cent by 2017 from 53.5 per cent in 2012, warning of a "long tunnel" of depression unless every economic lever is mobilised.
Concern South Korea's demographics will condemn it to follow Japan into years of deflation has stalled gains in equities and driven a rally in sovereign bonds. With the country's working-age population set to shrink after 2016, according to Organisation for Economic Co-operation and Development data, barriers thrown up to women like Kim are threatening to slow growth and further swell household debt.
"A shrinking workforce means less tax revenue and strained public finances, and in an economy of this size that's a direct risk to the sovereign credit rating," said Park Sung-wook, a Seoul-based economist at Korea Institute of Finance. "Korea needs more women to work and people need to postpone their retirement or find second jobs to generate income."
The country's finance minister, Choi Kyung-hwan, last week warned that South Korea could face deflation if growth was allowed to slow further.
Park, aiming to create 1.65 million new jobs for women by February 2018, the end of her term, has said companies with a female share of the workforce less than 70 per cent of their industry's average for three consecutive years may be publicly named and shamed.
Six of her ministries, in a joint statement in February, said the government will encourage flexible working hours, enhance childcare programmes and improve training for mothers seeking to re-enter the workforce.
Starbucks Coffee Korea last year rehired 100 mothers who quit for childcare reasons, while Cho Yoon-sun, Korea's minister for gender equality and family, identified Hyundai as one company that should be looking to the examples set by Samsung Electronics and Lotte in hiring and promoting women.
Japanese Prime Minister Shinzo Abe has made promoting women a centerpiece of his economic policy as well, planning to raise their presence in parliament and have 30 per cent of management positions filled by females by 2020. Like Korea, Japan, Asia's second-biggest economy, also faces an ageing and shrinking labour force.
While Korea has maintained its unemployment rate at an average of below 4 per cent - among the least for OECD countries - as gross domestic product growth slowed, the figures mask the lack of participation by women and a growing trend of temporary employment, according to a working paper published by the Bank of Korea last month.
Incentives could "increase female participation rates by about 8 percentage points," the paper's authors, led by the International Monetary Fund's Mai Dao, had concluded.
Greater labour market reform "should boost employment in Korea, in turn supporting household incomes, confidence and willingness to spend", said Matthew Circosta, an economist at Moody's Investors Service in Sydney. "A stronger labour market, alongside lower rates, gives households the capacity to reduce debt burdens."
An OECD report submitted to Park last year estimated South Korea could add about 1 percentage point to GDP growth if it had equal employment. The economy grew 3 per cent last year. Korea's 2012 female labour participation rate of 53.5 per cent compares with an OECD average of 57 per cent and a Group of 7 average of 61.7 per cent, according to the organisation's Employment Outlook 2013, published in July last year.
"The shrinking workforce is the biggest risk to growth in the mid-to-long run," said Kim Kyung-soo, a former Bank of Korea economist and now professor of economics at Seoul-based Sungkyunkwan University. "The only countermeasure to that risk is bringing more women into the workforce."