Fostering the service sector

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Fostering the service sector

Pessimism is growing about Korea’s economy for next year, with growth expected to remain under 3 percent in 2013. This is bad news for the labor market and the 500,000 new workers who enter the economy every year. To sustain an employment rate of above 60 percent, at least 300,000 new jobs must be created. And since an increase in GDP of about 1 percent equates to 70,000 new jobs, 4 percent growth is the minimum goal.

The economy grew about 3 percent last year and will grow about 2 percent this year, but serious employment problems were avoided as small businesses owned by the self-employed recruited about 400,000 workers. But many of these businesses are likely to close down in the near future thanks to high debt obligations and a slump in consumption. Moreover, large companies will also be cutting labor costs. For the first time, Hyundai Heavy Industries has started accepting applications for early retirement, and other companies are likely to follow.

And yet, regardless of these bleak economic prospects, the presidential candidates are still preoccupied with talk of “economic democratization” and social welfare programs. We need to enhance social security and provide assistance to those without jobs. But what’s more imperative is to give them new jobs from the start. Real, honest work is the best means of welfare.

To accomplish this feat, we have repeatedly called for a focus on growth in the service sector. Manufacturing has long lost its role of generating vast numbers of new jobs, because in the modern technology age, better productivity means companies need fewer workers.

However, none of the main candidates have provided concrete strategies to reinvent the country’s industrial businesses or more toward services. More than 32 organizations in the service sector, including banks and hospitals, issued a statement demanding that the presidential hopefuls develop ideas to assist their sectors. They pointed out that the service sector is essential to boosting domestic consumption.

First, we must eliminate red tape, and the medical and education sectors would be good places to start. These two sectors are the most heavily regulated, weighing down businesses with unfair and illogical rules and procedures. Let’s start with allowing the operation of a for-profit hospital in Songdo, the free economic zone in Incheon. And from there, the presidential candidates should take the lead. Services are the future of our country’s economy, and they should be operating with this reality in mind.
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