Labor reform is key

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Labor reform is key

President Moon Jae-in and his government place creating jobs as a top economic priority. The key to the agenda to make the economy better for everyone is to make more jobs. Enterprises make jobs. The jobs in the public sector the government are creating can help. But at the end of the day, jobs must be added naturally through market mechanism.

The Employment and Labor Ministry formerly nullified the two major labor regulations under the former government that enabled employers to fire poor-performing workers and revise working terms without full consent of the employees to make the labor market more flexible.

Doing business is becoming more and more difficult under the new liberal government. The government has been pressuring the private sector to follow suit after the president promised to put all irregular workers at Incheon Airport on the permanent payroll. The government overlooked the different nature of franchising and imposed the same hiring regulations on their agency workers as on manufacturers to take punitive action on bakery franchiser Paris Baguette.

It made wireless carriers cut phone bills to meet the president’s campaign promise. The minimum wage has been raised by double digits and maximum corporate tax rates will go up next year. All the policies are negative for employers.

There is no sympathy for the business sector. The market, business, and consumer sentiment have turned bad amid escalating geopolitical tensions. The consumer sentiment index fell for the second consecutive month in August. Apartment prices in Seoul have strengthened to suggest widening jitters and skepticism about the economy.

The government vowed to place public and individual interests above national and corporate interests in economic policymaking. Scaling back its focus on enterprises to ensure more balanced income growth for the population is understandable. But the means should not be corporate bashing. It cannot push the large corporations to go abroad to make money and leave the domestic market to the small players.

The road map to improve labor-management relations under former liberal President Roh Moo-hyun in 2003 also proposed guidelines to make it easier for companies to dismiss redundant workforce. It as bold for the left-leaning government to seek a conservative agenda including a free trade agreement with the U.S. and flexible labor rules. The Moon Jae-in government is out to succeed Roh’s policies, but has not inherited his open-mindedness.

JoongAng Ilbo, Sept. 27, Page 30
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