NABO Industry Trends and Issues (No. 5)
I. Employment, Population, Pension Trend
(Employment) In January 2018, the number of employed increased by 335 thousand people (1.3%) YoY. By sector, the manufacturing sector provided employment for 4.6 million 9 thousand employees as of January 2018, down 9,000 (-0.2%) MoM and up 106 thousand (2.4%) YoY; while new employees in the services sector increased by 37 thousand (0.2%) YoY.
(Population) As of end-January 2018, the number of registered citizens increased by 74 thousand YoY, recording 51 million 779 thousand people. 360 thousand babies were born in 2017, recording less than 400 thousand births for the first time.
(Pension) As of the third quarter of 2017, the National Pension Service has 21.84 million subscribers, up 0.2% YoY and its reserves increased by 12.5% YoY to 612.4 trillion Korean won. The number of subscribers to the Retirement Pension plan increased by 11.3% YoY, and its reserves increased 16.1% YoY.
Ⅱ. Analyzing the Impact of Restricted Overtime Work on Wages and Employment
Provisions on restricting work to no more than 52 hours a week and reforming the system on allowing exceptions for scheduling working hours under the Labor Standards Act were amended in the National Assembly. Analyses revealed that the restriction of extended working hours would reduce the amount of labor equivalent to the working hours that exceed 52 hours a week (6 million 475 thousand hours), and that it will be possible to create 125 to 160 thousand new jobs in order to compensate for the lost hours. Since workers’ wages are more than likely to decrease following the overtime work restriction, the corporate sector and the government need to prepare appropriate measures.
Ⅲ. Policy Trends related to the Status of Cryptocurrency Transactions
The global market capitalization of today’s (Feb 5, 2018) virtual cryptocurrency is nearly 379.8 billion dollars (appx. 414 trillion won), and its daily transaction volume is estimated to exceed 22 billion dollars (appx. 24 trillion won). Over the past two months, Bitcoin prices remained higher in Korea than in the global market, while some cryptocurrencies have become overheated and exceeded 40% of the entire transaction volume in the Korea Exchange. Although the government has pursued measures to address the cryptocurrency issue, additional effective measures need to be developed.
Ⅳ. Analysis of the Factors against which Corporates Decide the Timing for the Introduction of Retirement Pension Plans
The Retirement Pension plan was introduced in 2005 as an effort to complement the low income replacement ratio of the National Pension Service while reducing the risk of corporates keeping their employees’ pension reserves in-house, but has yet to become widely accepted. According to an analysis of factors that affect companies when deciding on the timing of introducing Retirement Pension plans, the relevant factors included the size of the company (number of employees), systemic changes, retention rate and the ratio of older employees. In order to accelerate the timing of corporates’ introduction of Retirement Pension plans, attention must be given to consider a staged expansion of candidate companies, a retirement pension scheme that takes into account the conditions at each company, as well as improved employment conditions.