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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Dealing with Core Employment Problem of
Middle-Aged Worker Employment Woes

Dealing with Core Employment Problem of Middle-Aged Worker Employment Woes

TAE Won-You

May 29, 2009

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Middle-Aged Worker Employment Woes PDF email Print

Originally released on April 27, 2009

ABSTRACT

The unemployment rate of 40- and 50-year-old people in February 2009 was 2.5%. Although that was better than the nation's overall unemployment rate of 3.9%, this core age group's job growth is losing steam while its jobless rate is trending upward. Among those in their 40s, the number filing for unemployment insurance benefits in January shot up 48.7% year-on-year, far ahead of the rate of increase of other age groups. When companies start restructuring, it may take a heavy toll on the middle-aged workforce, a pillar of the labor market accounting for 47% of Korea 's employment and 46.4% of the economically active population. Given their low prospects of finding another job, unemployment in their ranks leads to a sustained decline in household income and consumption, thereby deepening social instability.

To better deal with the job problems facing middle-aged people, the government needs to devise a variety of policies that are customized for target groups (i.e., those who remain in workforce, the unemployed and those who are at risk of losing jobs amid restructuring.

First, the government needs to try to reduce the cost of employing long-standing workers by applying the “peak wage system,” which exchanges pay for job security, and reducing and diversifying work hours. Second, it is necessary to revitalize middle-aged workers through job training, repositioning, and diversification of career paths. Third, jobs geared toward the unemployed middle-aged workers need to be created. Fourth, social service agencies need to employ retirees with professional experience and social service agencies should be established for the economically vulnerable middle-age workforce. Lastly, when restructuring is not optional but absolutely necessary, employment support should be given to the middle-aged people to enable them to avoid unemployment and move to another job.

To solve the challenges facing middle-aged employees, companies need to establish a human resources system that is middle-age friendly and a restructuring fund to ready themselves for economic downturns. Along with providing short-term unemployment benefits, the government also needs to promote the re-employment of middle-aged people through practical and productive measures and improve the effectiveness of the Employment Facilitation Act. Wider application of government subsidies that encourage companies to retain and hire middle-aged workers also is needed, as well as downward adjustment of the age limit for job training, which will broaden the benefit to older workers.

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