The Korean economic crisis and working women

Abstract

This article evaluates the impact of the 1997 Korean economic crisis on female employees. Facts on employment, labour force participation, and the changing nature of jobs (permanent/temporary) tend to support “buffer” theories of women's employment. Occupational sex segregation was reduced substantially between 1997 and 2002; nonetheless, the unexplained portion of the wage differential between men and women (a proxy for wage discrimination) increased. The crisis created setbacks for the equality of working women in Korea; however, new realities stimulated a changed strategy in the form of a union for contingent and small-firm workers among Korean women.

Key Words:

• Korea
• discrimination
• occupational segregation
• women
• unions

Notes

¹ The pre-existing economic structure in Korea has been characterised as a conglomerate structure with strong connection to the government and intra-sponsorship (within a conglomerate) for loans. The structure had worked throughout the 1960s, 1970s, and part of the 1980s, enabling Korea to become one of the newly industrialised countries. However, in the era of free-market based global competition and high demands for a democratic society from the Korean people, this structure contributed to business practices, particularly in the finance industries, that made the economy more vulnerable to the rapid outflow of foreign capital in 1997 (A. Kim, 2004; Shin, 1998). Facing the withdrawal of foreign capital, Korea asked the International Monetary Fund for assistance and got a bail-out loan.

² For instance, in 2000 the male:female ratio of 0-4 year-old children was over 1.1 in part because female foetuses are more likely to be aborted (Gupta et al., 2003).

³ However, the earnings of Korean women, relative to men, are still quite low in comparison to the situation in other countries. In 2003, women earned 76% of what men earned in the US (US Census Bureau, 2004) and 85% on average in the EU (Eurostat, 2005). The Korean statistic is based on average monthly wages of all workers; the US statistics is based on median weekly earnings of full-time workers; and the EU figures are based on average gross hourly earnings.

⁴ In 2000, elementary graduates, middle school graduates, high-school graduates, and college graduates and higher composed 30.4%, 14.3%, 37.3%, and 18.0%, respectively, among women of 25 years and older, while the numbers were 15.1%, 12.3%, 41.6%, and 31.0% among male counterparts (Korean Women's Development Institute, 2002).

⁵ The statistical analysis is available from the authors upon request.

⁶ In the latter year, but not the former, workers in establishments with 5-9 employees were included in the survey; we eliminated those individuals in order to make our estimates comparable. Hence all observations are on employees in establishments with ten or more workers. All industries are included except agriculture/hunting/forestry, fishing, public administration and defence, private households with employed persons; and extra-territorial organisations and bodies.

⁷ We are unaware of any reason why this potential bias would change over time.

⁸ Table 3 contains the Oaxaca decomposition that uses the coefficients of the male equation. If the decomposition is instead based on the coefficients in the female equation, there is an increase in the residual (discrimination) from 47% to 49%. Monk-Turner and Turner (2001) similarly report, using data for 1988, that using the coefficients of the female equation, the residual is 46.9%, whereas using those of the male equation, it is 33.6%, similar to the pattern in 1997 according to our research.

⁹ Full results of the statistical analysis are available from the authors upon request.

¹⁰ In contrast, Monk-Turner and Turner (2004) report a slightly higher return to education for men than women in 1998, and also earlier in 1988.

¹¹ Chae (1993) also estimates 14.6% for men vs. 18.2% for women in 1989 – very high estimates in comparison to those of J. Kim (1991) for 1988 and others. Obviously, the particular control variables and methodology vary between studies.

¹² It should be mentioned that the union representation rates in our data sets are high, compared to overall union membership in Korea. The union membership numbers among all employees in our data are 53% in 1997 and 44% in 2002 for women and 64% and 59% for men, respectively. The difference between our data and the whole population can be due to the exclusion of small-sized companies in our data and the gap in union membership between large and small firms.

¹³ It estimates that about two-thirds of all Korean women workers are contingent and that 64% work for small employers.