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Low female employment rate weakens Korea’s productivity

Government intervention, tax revision proposed to boost female employment

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Published : 2014-08-05 20:39
Updated : 2014-08-05 20:39

Analysts warned Tuesday that Korea’s productivity will suffer if Asia’s fourth-largest economy fails to address its low rate of female workforce participation.

South Korea continues to struggle with low female economic activity due to socioeconomic factors including a lack of financial support for child care and education, and discrimination.

The analysts suggested government intervention and policy revisions that could benefit both private companies and female workers.

Easing the taxes on working couples, who currently face higher taxes and less credits than single people, would be one way to boost female economic activity by 2.5 percent, the International Monetary Fund and the Bank of Korea said in a research paper.
Visitors look at job bulletin boards at a job fair in Seoul. (Yonhap)

“Both partners should receive tax credits, as disposable income can affect women’s decisions on whether to keep their jobs,” said Hwang Ji-soo, a professor at Hankuk University of Foreign Studies, who joined the IMF-BOK study.

Korea could also increase female participation in the workforce if it adopted policies to support child care services, he said.

Korea’s female economic participation rate was 55.6 percent last year, compared with 77.6 percent for men, and far lower than the OECD average female rate of 61.8 percent.

Some experts said it might be more important for Korea to address issues such as poor education for women in their 50s and the male-dominated corporate culture.

“The labor participation of women in their 50s and 60s is low because they had a poor education during a time when the country had a deeply patriarchal society,” said Kang Jung-koo, a researcher at LG Economic Research Institute.

“(Inactivity) is also high among women in their 40s, even those with higher education, due to the corporate culture of shunning female workers who have to later leave their posts for childbirth and child care.”

Kang said the government’s intervention was necessary, otherwise the country’s low birthrate would worsen if it completely leaves it to the market, and would further widen the income gap between men and women.

Korea came in 117th among 135 countries in income inequality measured by the World Economic Forum in 2013, mostly due to low labor force participation, particularly in high-ranking jobs.

“Efforts are needed both by the public and private sectors to boost female employment and to ease labor inequality for sustainable growth,” said Kim Tae-jung, head of the BOK’s Economic Research Institute’s macroeconomics team.

By Shin Ji-hye (shinjh@heraldcorp.com)

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