Deregulate the service sector
The service sector that the government promised to bolster to stimulate growth in domestic demand and create jobs is still choking under piles of regulations. In March last year the government pledged to reduce red tape by a whopping 10 percent and nurture seven promising service areas by drastically scrapping regulations.
But according to a survey by the Federation of Korean Industries, regulations in the service sector grew 13.5 percent over the past year. About 71.1 percent of the new regulations targeted the seven promising service areas the government had identified to promote to boost domestic demand in a big way. The government has been discouraging - instead of encouraging - the service sector through additional regulations.
Sadly, various bills aimed at promoting the sector have been gathering dust in the National Assembly. The Basic Law on Services Sector Development has been pending in the legislature for nearly three years. A bill to promote the tourism industry has also been shelved for more than two years. It takes more than 600 days on average for a service-related bill to pass through the legislature. The promise to revive the economy through the revitalization of domestic demand and by creating decent jobs for young people was just rhetoric. Companies and young job-seekers have been hurt by the delay.
According to job data just released by Statistics Korea, joblessness among young people hit 11.1 percent in February, the highest since the Asian financial crisis in the late 1990s. Including those who have given up on looking for jobs, the unemployment rate went as high as 12.5 percent. The protracted slowdown in domestic demand and the service sector combined contributed to fewer job opportunities for the young.
Needless to say, deregulation is the fastest and easiest way to stimulate the economy and create jobs. The effect would be immediate in the service sector. Instead of all the rhetoric, the government and legislature must really act in order to boost the service sector and domestic demand. Without immediate action, the country could find itself in the middle of a lengthy stagnation and a flood of jobless young people.
JoongAng Ilbo, Mar. 19, Page 30