"There Are Women, But No Leaders"... Career Breaks Blocking Women's Growth [K Population Strategy]

Among 2,246 Listed Companies, 5.2% Female Executives
Female Wages Only 65% of Male Wages
4 out of 10 Experience Career Breaks

Editor's NoteThe key to solving South Korea's population problem lies within companies. A workplace culture that evaluates employees based on their work regardless of gender and a family-friendly environment are crucial to addressing the K-population issue. Although low birth rates result from complex factors, it is important to ensure that workplace burdens do not become obstacles that make people hesitate to have children. Asia Economy plans to visit companies leading family-friendly policies to identify factors that helped these systems take root stably, and to explore multifaceted solutions with companies facing practical challenges. Through this, we aim to encourage change starting from companies and analyze the government's role in enabling this. We listen closely to voices emphasizing that company culture and atmosphere that reduce psychological burdens are more critical than financial support, and propose alternatives from various perspectives.

"There Are Women, But No Leaders"... Career Breaks Blocking Women's Growth [K Population Strategy]

"If South Korea reduces the gender gap in working hours to the OECD average level, its per capita Gross Domestic Product (GDP) would increase by 18%."

This was a statement repeatedly emphasized by Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), during her speech at the World Women Directors Association special forum held in Korea last December. She said, "The number of working women is 18% less than men, and their wages are 31% lower than men's," adding, "Having more women in the workforce will raise national income, strengthen companies, and bring a better future for everyone."

She pointed out that although South Korea's female labor force participation rate has increased compared to the past, the actual gaps in wages and other aspects between men and women have not narrowed. To improve this, she stressed that direct support must be accompanied by a flexible labor market and changes in customs.

‘More Working Women,’ but Reality Remains

Recent statistics indicate that women's economic activity has become more active. According to Statistics Korea on the 25th, the female labor force participation rate in 2022 was 54.6%, up 4.5 percentage points over ten years. Notably, last year, the total number of new jobs increased by 327,000 compared to the previous year, with men accounting for an increase of 24,000 and women for 303,000. Of the 10 people employed during this period, 9 (92.6%) were women. A Statistics Korea official explained, "The increase is partly due to rising demand for childcare services employing women in their 50s and 60s," adding, "Since men already have a large number of employed workers, the increase in women appears more significant."

However, the proportion of women sharply decreases as positions rise to senior levels. A 2021 survey by the Ministry of Gender Equality and Family on the gender status of executives in 2,246 listed companies found that women made up only 5.2% of executives. The situation in 2022 was no different. An analysis by Asia Economy of the ‘Gender Equality Comprehensive Score’ data based on the top 100 listed companies by sales showed that the proportion of female inside and outside directors was minimal. Only five companies had female inside directors with decision-making authority.

According to the revised Capital Market Act of February 2020, listed companies with assets exceeding 2 trillion won are prohibited from having boards composed entirely of one gender. As a result, the number of female executives has increased, but most female executives remain outside directors. Moreover, due to the lack of specific penalty provisions, some companies have yet to appoint female directors.

The gap between the number of economically active women and women in senior positions reflects an environment with gender-based constraints. In fact, South Korea ranked 105th out of 146 countries in the ‘Gender Gap Index’ compiled by the World Economic Forum (WEF, Davos Forum) last year. The index includes indicators such as wage differences between men and women performing similar work and the ratio of female ministers and vice ministers compared to men. South Korea ranks high in gender equality indicators showing economic participation (Gender Inequality Index (GII), 15th out of 191 countries in 2021), but low in the gender gap index, indicating that ‘substantive equality’ is not guaranteed compared to other countries.

‘4 out of 10’ Experience Career Interruptions

This gap mainly arises because women experience career interruptions due to marriage and childbirth. According to the ‘2022 Survey on the Economic Activities of Women with Career Interruptions’ conducted by the Ministry of Gender Equality and Family in June last year on 8,521 women aged 25 to 54, 42.6% of women experienced career interruptions. Particularly, married women with children experienced more career interruptions than married women without children across all generations. The average age at career interruption was 29, and the average duration was 8.9 years.

This also affects employment rate gaps. The gender gap in employment rates in 2022 showed a sharp increase in the ‘M curve’ pattern, with an 18.5 percentage point gap in the 30-34 age group and a 30.7 percentage point gap in the 35-39 age group. Although this is a decrease from the 37.3 percentage point gap in the 35-39 age group ten years ago, it still indicates that career interruptions occur during childbearing years.

Cases of actual working mothers met during Asia Economy’s ‘K-Population Strategy ? Gender Equality is the Answer’ investigative coverage also reveal that quitting jobs after childbirth to care for children is frequent. Kim Suji (36, female), an employee at Finda, said, "It was difficult to work full-time at my previous company, so I quit," adding, "Without remote work, it would have been hard to work with a child." (Related article: "A workplace that is a paradise for working moms and dads actually improves productivity" [K-Population Strategy]) Song Myungjin, lead of the Konivaerin Brand Group (41, female), said, "I considered quitting when my child entered elementary school," explaining, "During peak collaboration hours in the afternoon, I had to leave intermittently, making work seem impossible." (Related article: "During winter break, I bring my child to work"... A company that set up a classroom in the office [K-Population Strategy])

Persistent Wage Gap and Employment Instability

Another factor hindering women's professional growth is the wage gap. According to the ‘2023 Women’s Economic Activity White Paper’ released by the Ministry of Gender Equality and Family and the Ministry of Employment and Labor, the average monthly wage of all female workers in 2022 was 2,683,000 won, which is 65% of the 4,127,000 won earned by men. Looking at regular workers’ average wages, women earned 3,203,000 won, while men earned 4,633,000 won, a difference of about 1.43 million won.

The reality of lower wages for women leads again to career interruptions. Women, who generally earn less, tend to take on child-rearing roles after quitting work. If one parent must work while the other cares for children, it is most efficient for the higher-earning parent to work. In such cases, most disadvantages upon returning from parental leave fall on women.

Career interruptions occur more frequently in small and medium-sized enterprises (SMEs) than in large corporations. According to data submitted by the Ministry of Employment and Labor to Rep. Im I-ja of the People Power Party on ‘Employment Retention Status after Parental Leave by Company Size,’ as of July last year, the one-year employment retention rate after parental leave for SMEs (under 300 employees) was about 71.1%. In contrast, among 33,472 employees in large companies (300 or more employees), 29,449 maintained employment insurance for over a year, recording an 88.0% retention rate. The one-year retention rate in SMEs was 17 percentage points lower than in large companies.

Regardless of childbirth, women face more unstable employment conditions than men, which also hinders their growth. According to the ‘Economically Active Population Survey by Gender and Employment Type’ by Statistics Korea last year, among all wage workers, 70.2% of men were regular employees and 29.8% non-regular, while 54.5% of women were regular employees and 45.5% non-regular. Among female non-regular workers, temporary and part-time jobs constitute a large portion.

A report titled ‘Policy Directions for Employment and Childbirth Security for Women in Their 20s and 30s,’ published by the National Assembly Research Service in December last year, analyzed, "Although labor market participation of women in their 20s and 30s has increased compared to the past, instability in the female labor market remains high," adding, "Except for women entering the public sector and large corporations, it appears more difficult to maintain employment the younger the children are and the more children there are." The report further stated, "South Korea also needs to seek concrete strategies, methods, and means to reform the gender-discriminatory labor market structure from a mid- to long-term perspective."

Wage Gap Causing Low Birth Rates... Government Must Address Root Causes

Experts believe that it will be difficult to solve population problems without narrowing the gender wage gap. Heo Min-sook, a researcher at the National Assembly Research Service, said, "The issue of women quitting jobs due to caregiving responsibilities after childbirth has not been resolved, so birth rates do not increase and the wage gap does not narrow," adding, "There are no effective policies such as penalizing companies with large wage gaps or incentivizing those that reduce wage gaps." She criticized that current support measures remain superficial without addressing the root causes of low birth rates.

There is also analysis that flexible work systems and male parental leave policies for work-family balance should cover not only company employees but also self-employed and daily workers. Jeon Gi-taek, a research fellow at the Korean Women's Development Institute, said, "Government support systems for work-family balance are mostly designed for workers enrolled in employment insurance," adding, "Policies need to be operated in a way that also covers those outside this group."

Above all, a common voice is that to allow women to grow freely, the corporate culture accustomed to male-centered norms must be improved first. Bae Jin-kyung, head of the Korean Women Workers Association, explained, "Structural problems created by a male-centered society affect hiring and promotion processes," adding, "Measures to prevent discrimination, such as recording clear grounds for promotions, are necessary."

Song Da-young, professor of social welfare at Incheon National University and former head of the Seoul Metropolitan Government’s Women and Family Policy Office, said, "Microsoft in the U.S. checks quarterly the proportions of management positions by gender, race, and ethnicity," analyzing, "The ‘will’ of companies is most important in fulfilling diversity." She added, "The hierarchical structure centered on male and senior managers must be changed," and "Placing women in senior positions is not just a matter of gender equality but helps productivity by mixing people with diverse perspectives to encourage flexible thinking."