New job creation a red herringKorea experienced a surge in new job creation last month, with the number of jobs rising by 500,000 from September. This is almost double the on-monthly rise of 260,000 that preceded it and also represents bigger growth than the demographic increase of 454,000 in September. The unemployment rate also slipped to 2.9 percent, hovering below 3 percent for the first time in nine years. Such statistics are stunning against the backdrop of a global economy wrestling with a credit crisis in Europe, an economic slowdown in the U.S. and fears of a hard landing in the Chinese economy. It is great news, but hardly enough to justify Minister of Strategy and Finance Bahk Jae-wan’s excitable response online.
While the number of jobs rose, they are mostly temporary positions for people in their 50s and 60s. No jobs were added for those in the 20s, and the figure actually dropped for those aged 30 to 40. Half of the new positions involved shorter working weeks of less than 36 hours, suggesting they are low paying and less valued. Many of Korea’s now-retired baby boomers have started their own small businesses or are getting any work that comes along to make a living. But the situation cannot be said to be satisfactory if people have to settle for jobs they are too qualified for, either academically or in terms of work experience.
The situation could be improved if the government were to make efforts to advance the service sector, which takes up 54 percent of GDP and hires 66 percent of the economically active population. High-value-added fields like IT, finance, legal, accounting and other services have much room to grow.
The government knows what should be done and also how to achieve it. It has emphasized advancing the service industry but has failed to follow this up with credible action. It dragged its feet on forming a policy to advance the professionally licensed fields of law and medicine. It is also taciturn on whether it will allow high-street stores to sell popular drugs and has retreated from the idea of allowing for-profit hospitals. It has not done enough to create a corporate-friendly environment. In fact, it twisted arms, tightened up regulations and launched numerous audit investigations to dampen both corporate investment and morale.
It is a miracle that more new jobs can be created under the current conditions, something that the finance minister should be well aware of. But for the miracle to be more than just a pleasant or passing illusion, these jobs should be regular and also apply to younger people.