[EDITORIALS]Stop-gap measures will failTo nobody’s surprise, the top priority in the government’s economic policies for the second half is the same as it was for the first: to encourage investment and create more jobs.
The government understands that in order for our economy to revive, we need to see more corporate investment. Investment, in turn, would create jobs. But despite all the fanfare and slogans, our leaders’ efforts in the first half had very little effect.
The government has announced more than 20 different economic policies this year alone, but to no avail. The economy is showing no signs of getting any better; in fact, the Bank of Korea has predicted that the second half will be even worse than the first.
In what seems a desperate move, the government has announced that it will implement a new employment subsidy system in the second half to help create jobs.
However, it is doubtful that the government’s new employment subsidies, along with the existing employment insurance fund, will get a result. According to a survey conducted by the Ministry of Finance and Economy, small to mid-size firms would rather see an economic revival take place than take government hand outs. If the economy doesn’t recover, no amount of employment subsidies will persuade such firms to hire more people.
The budget for an employment subsidy fund for middle-aged and senior citizens was set at 15 billion won ($12.5 million), but only an absurdly small amount ― 2 million won ― had been paid out by April. This shows the limits of any employment subsidy system. Also, such subsidies might expose businesses to the temptation of trying to get the money without actually hiring people, using various backhanded methods ways. The government must be very careful that this fund is not wasted without actually creating new jobs.
Much more critical is encouraging corporate investment. In this area, uncertainties in the corporate management environment are holding back investments just as much as the country’s economic situation.
What this government needs to do is to make sure that its own actions, as well as those of the political community and the labor unions, don’t discourage businesses from making investments.
Ad hoc policies such as employment subsidy systems are not going to see us through these hard times.