Unemployment shock

Employment has hit its lowest point in eight years, contrary to the Moon Jae-in government’s promise to increase jobs and incomes. According to the February job data released by Statistics Korea, the number of newly-hired workers stopped at 104,000, the lowest since January 2010. The data should be a warning to the government, which has been pushing ahead with pro-labor policies that dampened corporate investment and hiring in return.

Many experts warned the steep rise of 54.5 percent in three years to increase the legal hourly wage floor to 10,000 won ($9.40) is too fast and risky. A double-digit rise in minimum wage starting this year has forced small-business owners to tend to their business themselves or seek help from family members because they cannot afford staffing. The lodging and restaurant sector shed 22,000 jobs last month, and as many as 92,000 people lost jobs in the broader wholesale and retail sector last month.

President Moon Jae-in’s so-called people-oriented and income-led growth is actually costing jobs and incomes. Instead of changing the direction and action plan, the government is busy covering up the fallout with makeshift measures. The government has budgeted 3 trillion won to help employers with the sudden rise in labor cost. Still, unemployment has reached 1.26 million.

The government is considering raising the supplementary budget to create jobs for young people. This year’s fiscal spending is already the largest-ever at 429 trillion won. There had been 28 measures since 2003, but the worsening job conditions have not improved. Jobs are made by corporations. But instead of fixing the rigidity in the labor market, the government increased positions in the public sector to help stretch the headline job number.
Moon vowed to create 810,000 jobs in the public sector. But a bigger public sector could hurt public finance. The committee on jobs is virtually useless as most of the key members have resigned to run in June’s local elections.

Jobs cannot be made as long as companies are squeezed. Offshore investment by Korean companies reached all-time high of 47 trillion won last year. Those investments came at the cost of jobs on the home turf. Korea is in job crisis while conditions are improving fast elsewhere. We can only watch with envy at Americans and Japanese enjoying perfect employment. The government must correct its policy direction towards making a better corporate and business environment before things worsen.

JoongAng Ilbo, Mar. 15, Page 30