[Editorial] Overeducated workforce

With the entire world contaminated with the eurozone virus, the Korean economy is also beginning to feel the impact of the global slowdown.

Government policymakers recently revised down their growth forecast for this year to 3.5 percent from 3.7 percent in the face of shrinking exports coupled with sluggish domestic demand.

The effect of their stimulus measures appears to be limited.

What if there was a way to boost the growth rate by one extra percentage point without increasing government expenditure?

A recent report suggested that the country’s gross domestic product could expand by 1.01 percent, if not for the glut of university graduates unemployed or with jobs that do not require their degrees.

About 42 percent of college graduates, whose number has exceeded 500,000 annually in recent years, are thought to be jobless or overqualified for their jobs, according to the report published by the Samsung Economic Research Institute last week.

If the graduates without jobs or in positions below the level of their education had chosen to work as soon as they came out of high school, it would have helped invigorate the economy, the report noted.

With a college diploma seen as a ticket to higher income and upward social mobility in the past, the proportion of high school graduates entering university jumped from 21.4 percent in 1977 to 83.8 percent in 2008. The ratio, which declined slightly to 72.5 percent last year, remains at the world’s highest level, compared with the 2008 figures for Germany with 36 percent, Japan with 48 percent and the U.S. at 64 percent.

The overeducated workforce hampers economic vitality by distorting the labor market and causing huge opportunity costs.

Though many who graduated with a bachelor’s degree remain jobless, their reluctance to work for dangerous, lower-paying small manufacturers have left those firms suffering from labor shortages.

The number of college graduates who are not engaged in economic activity increased to a record high of 3.02 million in the first quarter of this year, up from 2.06 million a decade earlier, according to figures from Statistics Korea.

Their proportion of the economically inactive population also rose from 11.8 percent to 18.3 percent in the cited period.

The overeducated workforce causes nearly 19 trillion won in opportunity costs including tuition fees and salaries that would have been income earned if they had chosen to work instead of going to college, according to the report.

Taking into account private education expenses, the excessive costs amount to nearly 40 trillion won, which accounts for 3.2 percent of last year’s GDP.

These estimates and assumptions might not be taken at face value but should certainly make us reflect on the increasing negative impact of an overeducated workforce on the economy and the urgent need to restructure the education system to match the actual demand in the labor market.

Koreans are now required to look into the reality that the glut of educated workforce has transformed from a blessing into a burden dragging down the economy.

It is an encouraging sign that the number of employed high school graduates increased for four consecutive months to 9.69 million in April, possibly reflecting efforts by the government and corporations to offer more jobs to those coming out of high schools.

There is still much to be done to narrow the gap between treatments for college and high school graduates. Workers with a college degree received an average 2.92 million won in monthly wages last year, compared with 1.78 million won for those who graduated from high school.

The glut of overeducated workers will be eventually settled when high school graduates become convinced that they can be equally treated based on their ability and career experience and thus lead a stable life as a member of the middle class.