Swimming against the tideKoi, also known as Japanese carp, are wondrous creatures. Their physical growth is dependent on environmental factors such as water temperature and, most important, the amount of food they have access to. In a river, a koi can grow to one meter or longer. The fish evolves according to its surroundings to lengthen its life. It has a unique way to survive in an ever-changing and challenging environment.
The bigger the playing field becomes, the greater the player’s value must be. This should apply to both companies and individuals. Companies should be given the conditions that will allow them to survive with other types including foreign species.
The latest report from the Organization for Economic Cooperation and Development (OECD) could be a wake-up call for Korea. In its Employment Outlook report for 2016, the organization concluded that after studying Spain, Slovenia and Estonia — countries that implemented labor reforms — permanent jobs increase when excessive protection of permanent jobs is lifted. In short, opportunities have increased for the companies, they’ve grown bigger, and then they need more workers. An overall employment rate that was 63.8 percent in Estonia when reforms were being instituted shot up to 71.9 percent last year.
Korea’s overall employment rate has stubbornly remained at around 60 percent.
The Park Geun-hye government has been calling for labor reforms for several years. Its growth rate became slower and slower even as the government continued with an expansionary policy including multi-billion-dollar supplementary budgets almost every year. The job outlook also turned murkier. Everyone talked about the need for structural reforms, including of the labor market, and that there was little time left to save the economy.
That sense of urgency waned during April’s legislative election. The power of the ruling party to push reforms has become decisively smaller. Ruling party members on the legislature’s Environment and Labor Committee number six compared with 10 from the opposition. Some are already saying the government and ruling party have given up on labor reforms. Corporate restructuring has instead picked up speed. Dockyards are mercilessly shedding jobs except for the larger shipyards, which are heavily protected by unions.
Employees on permanent payrolls in small and mid-sized companies earn less than half of what their counterparts in large companies get. The gap is getting wider. Still, the call for labor reforms is no longer heard.
The so-called exclusive jobs remain intact. Large manufacturers keep those jobs for their relatives. Jobs for agency workers are strictly limited to 32 sectors, leaving little work for retirees. The opposition has recently come out with the idea of setting hiring quotas for young employees in large companies. The ruling party is proposing to allow companies dismiss as many employees as they hire anew.
Politicians think they can order around companies on the issues of hiring and firing. They are attempting to control the course of nature instead of leaving it to the market. The market will lose its equilibrium as a result of such excessive outside intervention. This is the same as the reckless release of a foreign species bringing about disruption in an ecosystem.
In February 2015, the OECD advised Estonia — which has a higher overall employment rate than Korea — to accelerate reforms to bolster productivity and growth through reforms of its labor market. It suggested the government make the market flow better by steadying and widening the waterway.
Jobs grow better in a natural setting, just like fish. They become stronger and flourish when they compete on their own for survival. If they are kept in bowls or tanks to be homegrown and protected, they will eventually lose their innate capabilities. They must be free to swim on their own and against the current to reproduce, thrive — and grow. We can never enlarge the job market with fish-tank logic.
JoongAng Ilbo, July 11, Page 28
*The author is an editorial writer of the JoongAng Ilbo.