[Why&Next] Increasing Working Women and Elderly... Korea's Employment Rate Hits All-Time High in OECD

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According to the Organization for Economic Cooperation and Development (OECD) standards, South Korea's employment rate has reached an all-time high. Despite unfavorable economic conditions, the increase in employment among women and the elderly has been analyzed as a factor driving up the overall employment rate.

On the 23rd, the OECD reported that as of the third quarter of last year, South Korea's employment rate was 69.4%, marking the highest level since the OECD began compiling related statistics. The OECD calculates employment rates based on the population aged 15 to 64.

Among OECD member countries, Iceland ranks first with an employment rate of 83.6%. The Netherlands is second at 82.5%, followed by Switzerland in third place with 80.4%. New Zealand ranks fourth at 79.8%, and among Asian member countries, Japan is fifth with 79%.

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However, South Korea's employment rate remains lower compared to the OECD member average of 70.1% and is significantly below the 73.1% average of the Group of Seven (G7) advanced economies.

Among the 40 OECD member countries in the third quarter of last year, South Korea ranked 27th in employment rate, improving from 30th in 2021, but still remaining in the lower tier. This is why there are calls to increase employment further.

The improvement in South Korea's employment rate is attributed to a substantial rise in economic participation among women and the elderly.

South Korea's female employment rate reached a record high of 61.5% in the third quarter of last year, up from 56.5% in the first quarter of 2021. During the same period, the male employment rate increased modestly from 74.5% to 77%. The rise in working women has boosted the overall employment rate.

This trend is also reflected in statistics from the Korean Statistical Office. According to employment trends, the number of employed women last year was 12.464 million, a 2.5% increase from the previous year, while employed men numbered 15.952 million, showing only a 0.1% increase during the same period. Women in their 30s made up the largest portion of female employment. The employment rate for women in their 30s increased the most across all age groups, rising from 64.4% to 68% within a year.

Seo Woon-ju, Director of the Social Statistics Bureau at the Korean Statistical Office, explained, "Fundamentally, women's employment rates have been lower than men's, but due to factors such as improved education levels among women and delayed marriage age, economic participation has increased, resulting in a higher growth rate in female employment compared to males."

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The rise in employment rate is also influenced by an increase in elderly people entering the workforce. The employment rate for South Koreans aged 55 to 64 rose from 65.6% in the first quarter of 2021 to 70% in the third quarter of last year. Considering that the OECD average employment rate for the elderly is 63.9% based on the same criteria, it can be interpreted that middle-aged and older adults in South Korea tend to retire later.

Economic participation among those aged 60 and above is particularly notable. According to employment trends from the Korean Statistical Office, the number of employed people aged 60 and over in South Korea surpassed 6.22 million last year for the first time, breaking the 6 million mark. The employment rate for those aged 60 and above increased by 1 percentage point to 45.5% compared to the previous year, marking the highest growth rate except for those in their 30s.

On the other hand, the employment rate for those aged 15 to 24 was 27.9%, significantly below the OECD average of 43.7%, and the employment rate for those aged 25 to 54 was 78%, also below the OECD average of 80%. This indicates that South Koreans tend to start working later and continue working until an older age.

The increase in elderly employment is closely linked to the growing elderly population. Director Seo stated, "Fundamentally, the population structure of those aged 60 and above is becoming very large and rapidly increasing," adding, "Employment is increasing mainly in health and welfare sectors where the elderly can work."

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Although the quantity of employment has increased since the pandemic (global outbreak), there are concerns about the quality of jobs. Most of the new jobs are short-term or low-wage positions, which negatively affect labor productivity. A decline in labor productivity can adversely impact long-term economic growth.

A report titled "Job-rich recovery after the pandemic," published by the Bank of Korea's Research Department in October last year, pointed out that employment growth has been concentrated in the service sector, which generally requires lower education, skills, and wages. The report analyzed that the increase in low-wage jobs and the difficulty companies face in finding desired personnel have hindered smooth labor reallocation.

Oh Sam-il, head of the Employment Analysis Team at the Bank of Korea's Research Department, stated, "As the labor market rapidly expanded over a long period, many workers with relatively low productivity entered the market, and the labor productivity growth rate remains lower compared to the pre-pandemic period," adding, "The rapid recovery of the labor market without smooth labor reallocation is negatively affecting labor productivity."

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