Create jobs, tooThe government has come up with a blueprint to raise our total employment rate to 70 percent. It plans to take the lead in creating decent temporary jobs in the public sector by injecting a 6 trillion won ($5.34 billion) budget. We welcome its employment-friendly policy aimed at lifting the figure by sharing more jobs in the public domain, given the difficulties of creating more jobs at a time of low growth.
However, it would be too much to expect the government to be able to increase the rate to 70 percent from the current 64.2 percent within five years. That’s a goal only achievable when our economy grows 8 percent annually for the next five years. In other words, if the administration sticks too stubbornly to a fixed numerical goal, it will lead to unwanted results: More non-regular jobs in the market.
Even though it could take longer, the government must think hard how to create more quality jobs. Despite the government’s decision to throw a wad of money into the public sector, it will be of limited use unless quality jobs are created in the private sector. Once the number of jobs in the public sector increases, it never stops in what amounts to Parkinson’s Law, in which the demand upon a resource tends to expand to match the supply of the resource.
More importantly, the government must create an investment-friendly environment to induce private companies to invest more money at home rather than overseas. At the same time, powerful labor unions of large companies must give up their selfish sensibilities. Without the genuine sharing of pain among labor, management and government sectors, the idea of creating more temporary jobs is nothing but an illusion.
The government must return to the basics: A short-term approach to share more jobs combined with a long-term approach to rejuvenate the economy through deregulation. If it puts disproportionate pressure on businesses, it will lead to a vicious cycle of job quality deterioration leading to lower productivity and weakened growth potential.
The elasticity of employment in Korea varies among industries. For instance, the elasticity in the services sector is much higher than in the manufacturing sector. However, the government failed in deregulating the services industry due to resistance from various interest groups. If the Park Geun-hye administration wants to raise the employment rate, it must ease regulations on services. In fact, the success in Germany and the Netherlands in sharing more jobs through a grand consensus is an exceptional model. The government must focus on creating - not sharing - more jobs over the long haul.