Choi pushes law for service sector

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Choi pushes law for service sector


Finance Minister Choi Kyung-hwan. By Kim Seong-ryong

Finance Minister Choi Kyung-hwan called on politicians to cooperate on legislation to boost the service sector and avoid making it a political football. He was talking to the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily, to mark the first anniversary of his inauguration.

“It is difficult for Korea to reach $30,000 or $40,000 in gross national income per capita only by boosting the manufacturing industry,” he said at the Seoul Government Complex on Monday. “Growth in service industries will solve the youth unemployment problem and create significant added value [in the economy]. Nurturing service industries is a key to creating jobs for young people.”

In July 2012, the administration submitted a bill to the Assembly on developing the services sector, but it has languished since then. The bill calls for setting up a committee with authority over all government organizations to chart a development course for the sector and provide support.

Opposition lawmakers don’t like that idea, in particular because they see “developing the medical sector” as a code word for privatizing medical care. Another bill addressing issues in medical tourism has not yet been taken up for the same reason.

“There is no relationship between attracting foreign patients and medical privatization,” the minister said. “Politicians should not abandon the youth unemployment problem because of their political beliefs.”

Choi also sounded determined to push for changes in labor laws.

“There is a public consensus about the necessity of reforms in the labor market,” he said. “Particularly, the peak salary system should be adopted regardless of the agreement of employees.”

That sentiment will not be received well by unions, whose consent is required under existing law.

The minister said he has asked President Park Geun-hye to offer pardons for businessmen, including heads of some conglomerates, to shore up the sagging domestic economy.

The following are excerpts from the interview.

Q. When you took office last year, you said in your inauguration speech that you would “walk on paths, not on a map.” What does that mean?

A. At the time, the country was engulfed by the Sewol ferry disaster. To salvage the country from the crisis, I needed to take a new route. With the previous measures, it was difficult to do that, so I thought we needed to get out of the box.

So what is the priority to boost the economy?

Previously, Korea developed based on growth in manufacturing. But it is now difficult to build more factories for automobiles or steel in Korea.

We should upgrade our service industries. Other developed countries went through similar procedures. Jobs that the young generation wants will mostly be found in the service industries, so we need a significant relaxation of regulations in the medical and education sectors.

Bills on those issues are still pending in the Assembly.

Politicians are dealing with this matter only based on political ideology. But there is no relevance between attracting foreign patients and medical privatization. Many large Korean hospitals are trying to make money abroad. But when they try to bring back money they earn outside the country, they can’t do that because the current law prohibits medical institutions from commercial activities, even abroad.

What is the most urgent issue in your plans for reforms in the labor market, education, finance and public administration?

It’s the labor market. Korea’s labor market is too polarized. Regular staffers are too protected in their working conditions. But the pay and working conditions for contract workers are poor. In this situation, companies can’t help but hire people as contract workers.

We should ease the protection for regular staffers and increase it for contract workers to narrow the gap. And that is the solution for youth unemployment.

What needs to be done in detail?

We should revise the current employment rules, which were not accepted by unions at the failed negotiations between unions and management [in April].

The current law requires a majority agreement of unions to change an employment rule that could be disadvantageous for employees.

One of those rules is the peak salary system, unions say, but that system is linked to the extended retirement age. The government isn’t just disadvantaging employees.

What do you think is the reason for the high youth unemployment rate?

Youth unemployment has been triggered by three factors. First, there has been a wave of job-seekers born in the 1980s, and they are the children of the wave of baby boomers born after the Korean War. This mass entry into the workforce means that we have hundreds of thousands more new job seekers now than we did a decade ago.

Second, most children of the post-war generation have bachelor’s degrees and don’t want blue-collar jobs.

Third, with the extension of the retirement age to 60 starting next year, companies have to reduce the number of new entry-level jobs over the next three years. The number of senior employees who will see an extended retirement age is estimated to be about 300,000 over the next three years.

The real estate market is doing well, but there are complaints about a housing glut. Your thoughts?

Over the past few years, there has not been a sufficient supply of new houses. The children of the baby boomer generation will purchase houses soon.

Also, people in their 50s are expected to return to their hometowns in suburban areas after they retire, creating new demand for housing. In urban areas, there are many dilapidated units and there is demand for new ones.

Will businessmen be included in the list for pardons on the 70th anniversary of our liberation?

Korean companies are struggling with many difficulties. I think businessmen should be included in a list of pardons. I have asked President Park Geun-hye to do it.

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