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[EDITORIALS]Jobs: Stick to fundamentals

Published: 28 Jan. 2004, 23:05

The government announced that businesses creating new jobs would get a 1-million-won ($850) tax credit for each employee they add. Seoul also plans to abolish the special consumption tax on some items to boost consumption. Considering the reality that 800,000 Koreans are unemployed and that there are no signs of economic recovery despite signs of upturn in other advanced economies, it seems unavoidable that the government has to use tax breaks after other policy measures have failed.
The measure is even more dramatic than the request from the Korea Employers Federation that Seoul give a 500,000-won incentive per new employee.
Since the government is acting to create jobs, the business community must make stronger efforts itself. Labor must also cooperate by promising labor peace, a wage freeze or productivity improvements.
If there are no follow-up measures or an early economy recovery, the effectiveness of the measure will be temporary.
There will be few companies that would employ a new employee because of an 83,000-won monthly tax credit. Some people also complain that this is just a pork-barrel policy before the legislative elections. Others say the government is playing a numbers game to hit its target of 300,000 new jobs. Rumors are also flying at some government corporations that they are under pressure from Seoul to employ people despite the economic realities.
If they are using the measure just to get more votes or as a political gesture, the administration and legislators still must come out with some real programs soon. Otherwise, public corporations will become a new form of the dole, wasting tens of billions of won in tax money.
Instead of stopgap tax measures like this, it is urgent to improve the tax system so that enterprises can be free from an excessive tax burden. By lowering the corporate tax rates drastically, the government would make it possible for businesses to invest more. When tax rates here are at the same level as our competitors, foreign investors will choose to do business here.
Jobs must come from companies. Government policy must be centered on finding ways to allow enterprises to make money and plow it back into their businesses.