This report suggests policy implications to enhance employment of youth, women and the elderly by researching and analysing the European Union (EU) and its member countries’ employment related policies. Currently, Korea is facing problems with employment, as the European countries did during the 1990s and 2000s. In response to the situation, the European countries enforced various policies to reduce unemployment and to increase employment rate.
At present, the employment rate of the EU is at around 69%, which is higher level than that of Korea. By implementing labour reforms and policies, several European countries have been successful in improving their employment rates beyond initial expectations.
The unemployment rate in Korea is 3.7%, which is the second lowest amongst the OECD member countries after Norway. It is also lower than the half level of the OECD’s average unemployment rate. On the other hand, employment rate in Korea is approximately 65.3%, which is slightly lower than the OECD average, and compared to those of developed countries the gap becomes even wider. Another issue is to improve employment rate of the vulnerable groups, such as youth, women, and the elderly. Accordingly, the Korean government is planning to boost employment rate to 70% by 2017 through the “Roadmap for 70% Employment Rate, 2014-2017” and the “Three year Economic Reform Plan.” In a related move, the Korean government aims to increase the number of jobs by 2.4 million through part time work, or so called flexible employment.
To this end, the government is planning to create approximately 930,000 part time jobs. Moreover, the Korean government is emphasising work life balance through child care leave and increased child care services, while improving the employment level of women by expanding social awareness on gender equality.
Then, what features do the EU’s strategies and policies have to lift employment rate, particularly considering youth, women and the elderly? The deepening of the EU integration has enhanced the role of the EU. In this sense, EU’s policies and strategies for employment became an important guideline to project the future direction of the EU member countries’ policies.
Based on research and interviews with the experts, the key features of employment in the EU are Active Labour Market Policy (ALMP), Vocational Education and Training (VET), and Apprenticeship. First of all, ALMP is an important method with respect to reducing the burden of employers and employees during the period of low economic growth. At the same time, it encourages the unemployed to return to the labour market as soon as possible.
In particular, social policies and employment policies are implemented complementarily. Services related to job offering, such as EURES, have been strengthened so that the EU could minimize the job mismatch between the jobseekers and the employers. VET is one of the key policy areas that the EU is focusing on to improve the employment conditions of the disadvantaged groups. However, we can further improve youth employment by implementing VET and Apprenticeship simultaneously. Moreover, it is important for the employers to show willingness to educate the employees. The possibility of an employee changing jobs within the same field would hamper the investment in apprenticeship by the employers, even though the effectiveness of apprenticeship has been fully recognised. Finally, in order to improve employment of the disadvantaged groups, social understanding should be made that a simple employment policy cannot act alone.
In other words, regarding the complexity of different social systems, economic structures, and legal systems, it is important to analyse the respective domestic situations comprehensively when formulating employment policies. Young people are more vulnerable to unemployment given their lack of professional experience, barriers to job markets and temporary employment position. OECD countries in general, youth unemployment rate is more than twice the level of overall unemployment rate and more sensitive to economic cycles, particularly during economic downturns. In addition to the business cycle, youth employment is affected by the level of protection for permanent/temporary workers, education level of youth, and the effectiveness of vocational/professional education. This study conducts several empirical analyses, taking youth employment rate, unemployment rate, and the ratio between youth and overall unemployment rate as dependent variables.
Economic cycle, labour protection level for both permanent and temporary workers, level of human resources, economic structure and education related indicators are considered as explanatory variables. The result shows that youth employment rate is positively correlated to overall education level and that of dual education based on apprenticeship. In particular, the share of apprenticeship in the overall education period shows high explanatory power on all dependent variables considered. This suggests that apprenticeship facilitates the transitional process from school to job, consequently contributing to higher employment rate of youth. Dual education can contribute to reduction of mismatches between education and professional qualification, and help young people to acquire skills and knowledge required for the jobs in the field.
Northern European countries have the highest rate of female employment. Germany and the Netherlands show higher female employment rates than the OECD average. The Northern European countries are the most exemplary in terms of narrowing the gap between employment rate for females compared to males, followed by Germany and France. However, unlike the Northern European countries, the increase in female employment in part time jobs in Germany and France actually led to a wider gender gap with respect to full time employment. According to previous studies, the determinants for the female employment rate depend on appropriate policy tools or policy combinations for different situations; in order for each society to achieve both the policy goals of female employment rate and birth rate, of which can run parallel to each other. However, most of the countries acknowledge that the services for childcare and child raising support are considered as effective policy tools to satisfy both policy goals. The policies for raising female employment rate in the respective European countries can be divided into the Northern European type, which executes active policy for work family balance, and the British type, which raises female employment rate by introducing flexibility in the labour market. Continental European countries, such as Germany and France, show a mixture of both. Part time employment in Sweden, which is actually a permanent position with flexible working hours, can be differentiated from part time employment in other European countries. In the German case, flexible labour market enabled the females, who had left the labour market due to the burden of childcare, to return. However, it also showed that the quality of employment has dropped while instability related to employment has risen. Although the increase of part time employment of females in France has led to instability in employment and degeneration of the working environment, the gender gap in terms of wage income has become narrower than that of other OECD countries, including Germany. In order to achieve the policy goals it is important to conduct in-depth analysis on the constraints.
When there are many differences in the background, such as in the family welfare system, the structure of the labour market, and the downward inelasticity of wages, the same means of policy may occur different consequences. As the average life expectancy increased in the EU, the burden related to the elderly has been increasing. Although the participation rate in the workforce of older people in the EU in general is showing an upward trend, as older workers’ unemployment has a higher chance of evolving into a long term unemployment. The factors that can affect the employment of the older people include obligatory retirement age, pension schemes, and working environment, as well as perceptions toward older workers. In the cases of Finland and the United Kingdom (UK), since these above mentioned factors can complicate the situation and prompt older workers to stop working, policies need to be managed more carefully. The employment of older workers in Finland is showing following characteristics. The government makes careful policy planning and execution with external assessment on the process, which later on spreads out to the whole economy. Various campaigns to reinforce positive image of older people and to recognise the necessity of older people remaining in the workforce allowed the effective functioning of other programmes to prepare for the ageing society. Moreover, programmes such as hygiene management among the workforce, as well as amelioration of education and communications are to improve overall working conditions. UK adopted policies that cover all age levels before adopting programmes specifically designed for the older workers. They are trying to minimise trial and error by being cautious with the policy, implementing new policies nationwide only when measures for the sample group turns out to be successful. Moreover, the changes in retirement and pension schemes aim for rejecting early retirement as well as campaigns to improve positive recognition on older coworkers. Both Finland and UK are raising the retirement age, providing incentives to remain in the labour market instead of choosing early retirement, and initiating campaigns to positively change the attitudes toward older workers. Among incentives to make the older workers remain in the labour market, the Finnish government are providing additional pension amount for the additional working hours and in the UK they are providing subsidies or tax benefit for the companies hiring older people.
Moreover, other cases such as the Finnish government’s active PR campaign to pull the older workers back to the labour market and the UK government’s campaign, providing information material on research that the productiveness of the older workers are not low, are recognisable as well.
This study provides implications for policies on youth, women and elderly employment. The implications for youth employment are as follows. First, it is necessary to develop active measures to reduce mismatch between education provided and the demand from the labour market. It is often mentioned that the high rate of university admission among Korean youth is one of reasons that youth employment rate in Korea is low. However, it is difficult to find empirical evidence from comparative analysis with OECD countries. It is a fact that the job market entry age for Korean youth is becoming progressively late. This is partly due to the fact that the job market requires increasingly high professional qualifications from the young job seekers, of which the schools, including universities, are unable to provide. Second, creating an apprentice system in accordance with the current situation in Korea is highly recommended.
Countries with well developed dual education system clearly show high employment rate as well as low unemployment rate of the youth. It is noteworthy that less than 10% of young people in Germany are jobless within 3 years of completion of dual education. Third, it is necessary to improve the situation regarding the dual labour market, in which temporary or irregular workers are not properly protected and have difficulty securing regular employment contracts. A number of studies insist that dualism in the labour market is a cause of high unemployment rate among youth. In Korea, the number of temporary or irregular workers among youth is higher than that of the middle aged groups. In this context, it is recommendable to improve working conditions for irregular workers, while taking measures to increase flexibility in the labour market for regular workers.
The implications in this study regarding employment of women are as follows. First, in general, European countries have pursued dual policy objectives, namely simultaneous increase of employment of women as well as the birth rate. Expansion of childcare services is one of the policies to facilitate employment of women and to increase childbirth. Second, increasing the share of part time workers can contribute to increased employment of women, however, cautious approach is required as it has been criticised for lowering the quality of employment. It is notable that flexible working hours in Sweden was widely introduced in order to achieve work family balance. Third, it is necessary to provide assistance to women who had their careers interrupted or discontinued due to childcare and invite them back to the labour market.
This study also provides implications for elderly employment. First, it is necessary to change the perceptions towards the elderly in the workplace and take active measures. The Finnish case is noteworthy in that the government of Finland began implementing measures in the 1990s, starting with analysis and assessment of working conditions of the older workers, followed by public promotions. Its government has continued to provide support programs and improved them through ex poste assessment. In the case of the United Kingdom, its government was less supportive in terms of fiscal spending in old age work than Finland, but its efforts have been concentrated in providing legal framework for old age employment, as well as creating favourable environment for the recruitment of and equal conditions for older workers. Second, it is recommended to develop a legal framework in order to increase retirement age. This is all the more necessary, because Korean society has been ageing rapidly and the gap between legally pensionable age and the actual retirement age from the workplace is widening. Third, it is necessary to develop incentives for old age employment both to workers and employers. The incentives can be designed to take various form such as education and public health services in the work place, as well as financial forms. Last but not least, active PR campaigns will be necessary to boost employment of elderly workers. In particular, it should be emphasised that increased employment of old workers do not reduce job opportunities for the younger generation.