Nobel laureate’s warning still valid

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Nobel laureate’s warning still valid


An older gentleman passed me his publication in the hallway of the Korea Labor Institute in September 2008 and said, “Korea’s labor market is very rigid. At this rate, the vulnerable class may struggle even more.”

That man was University of Chicago Professor Gary Becker, a recipient of the Nobel Prize in economics who passed away on May 3. At the conference hosted by the Korea Labor Institute, Becker said that the high rate of irregular employees meant that the labor market was not working efficiently. His solution was to make it more flexible. The more difficult it is to fire regular employees, the more companies opt for irregular workers, and as a result, the pain is concentrated on this vulnerable social group.

He also implied that the Korean government was on the wrong track. The creation of jobs should be driven by the private sector, he argued. Instead of leading job creation, the government should redesign the tax system, implement minimum anti-monopoly regulation and design a system to encourage competition.

Labor Minister Phang Ha-nam was a researcher of the Labor Institute at the time, and Deputy Minister Jung Hyun-ok served as the head of the industrial safety department, and then the head of labor standards the following year. They both attended Becker’s lecture, and his warning is still valid now. A bill was proposed that doesn’t allow companies to fire their employees unless they are on the verge of a shutdown, and the government still pushes for various employment-related policies such as part-time work and the extension of the retirement age. The system even encourages public controversy by allocating a set number of jobs to certain groups and publicly disclosing the employment type.

However, the size of the irregular work force is not decreasing, and irregular workers are still paid half of what regular employees get. Jobs for women have risen, but because they are not desirable jobs, complaints have surfaced. Becker’s diagnosis from 2008 about the vulnerable class suffering more from the rigid labor market turned out to be true.

At the end of the lecture, Becker said the roles of the government include the guarantee of security in and out of the nation, maintenance of the social safety network and the proper management of regulations that are not extreme. The Sewol ferry incident, the suicides in low-income families and the bill that oppresses the labor market made me question whether the government is doing any one of those jobs right. The government is wielding its ideas like a magic wand, and unfortunately, Professor Becker is no longer in this world to provide us with sound advice.

JoongAng Ilbo, May 8, Page 33

*The author is a senior reporter on employment and labor issues for the JoongAng Ilbo.


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