Unemployment Profiles in courageIn South Korea, being 'too old, too experienced' can pose problems finding work
Kim Kyu Ho lost his job as a manager in a regional office of a large South Korean bank two years ago when the bank reduced the number of its branches and asked him to move to another city more than 160 kilometers away.
"I had my two children in school, and my wife had a job at local school," Kim said. "I didn't want to move. I believed that I could find similar work near my home."
In a time of economic slowdown, Kim has found the prospects considerably more difficult than anticipated.
"I didn't work for eight months," said Kim, who has a degree in business. "I'm 46 already. People said I was too old, too experienced."
Kim eventually found a temporary job at a small finance company for about two-thirds of his previous salary, which was about $50,000 a year, including benefits and annual bonus.
After several more months of looking, he went to work in March for a real estate company, where he uses his banking expertise to advise and assist in obtaining mortgages - but, again, at a pay considerably below his previous earnings.
"It's a tough economy," Kim said. "The government's unemployment figures look low, but they don't cover a lot of people who are only working a few hours a week or earning much less than they used to."
In fact, the latest statistics show unemployment in South Korea at 3.3 percent in August, down a tenth of a percentage point from July.
The Finance Ministry acknowledges that the figures are slightly skewed because fewer young people are looking for work while going to college and thousands of others have stopped looking. In hard figures, 22,126,000 South Koreans had jobs in August, down 33,000 from July.
For Kim, the rising prices means he hardly has enough to spend on private tutors for his children, the elder in the second year of high school, the younger in the last year of elementary school.
Luckily, however, he owns an apartment that he bought at a relatively low price five years ago in one of the new high-rises that dominate the skyline of Seoul and every Korean city. If the economy improves and he finds a better-paying job, he would like to save money to buy another apartment as a rental property. Typically, the value of the apartments of middle-class South Koreans like Kim has risen 30 percent to 40 percent in the past three years.
For Kim to recover sufficiently to reach the stage of investing in real estate, however, will be a daunting challenge.
"I lost a lot of money in the stock market last year," he said, when South Korea's benchmark stock index, the Kospi, went below 500 points, "but lately it's been looking up somewhat." (On Friday, the Kospi closed at 748.17.) "I keep some stocks in companies that seem safe, like Samsung Electronics, but you can't be sure of anything. Share prices in some of the biggest companies have gone down, and many others are stagnant."
Kim tries to resolve the problem by investing in funds operated by investment trust management companies, the South Korean equivalent of mutual funds.
"I go to an investment adviser at my bank," he said. "The funds I'm in have made some small profits, though of course they're closely related to the stock market."
Kim and his wife, Min Sook, a primary school teacher, have two life insurance policies and one health insurance policy, but they are thinking of canceling the health insurance and cashing in one of the life policies. Lack of health insurance, while a gamble, does not represent quite the same risks as in the West since the cost of routine care, including hospital stays, adds up on average to one-tenth of that in the United States.
"We need the money for tutors," Kim said. "It will be impossible for my children to get into a good university without tutoring. Every family I know has to have tutoring."
For many South Koreans, the temptation is to go into debt with the help of multiple credit cards and generous loans extended by most banks.
The average young person in South Korea holds four to six credit cards, and young people are in the habit of borrowing cash with one card to pay off another. The banks offer "minus loans" loans that are automatically extended as long as the customer remains within a specified limit.
Banks also routinely roll over mortgages, most of them three-year deals in which the homeowner pays the interest but no principal.
One result as of last June was an astounding nonperforming loan ratio of 12.14 percent on credit card loans, compared with 1.88 percent on household loans, including mortgages. The contrast reflects both the ease of obtaining credit cards and the loose repayment requirements on bank loans.
Kim and his wife carry eight credit cards between them, constantly juggling cash withdrawals against payments, and have taken out a bank loan of about $20,000 that they do not plan to repay soon.
Kim is not optimistic about pulling out of the financial morass.
"Companies hardly hire people my age, and young people are finding it difficult to get jobs, too," he said.
"We are waiting for the economy to improve, but much depends on the rest of the world. Sometimes we feel powerless."
In a Confucian society still dominated by hierarchical family loyalties and values, Kim and his wife count on the support of an extended family.
"It is only in recent years that Korea got so prosperous," he said.
"We are used to hardship. We need our family and friends to survive."