We need to be friendly to business

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We need to be friendly to business

The new government under President Moon Jae-in, elected in May last year, promised two things on the economic front — more jobs for the young and higher incomes for low wage earners. The Blue House set up a board with employment numbers in a show of its determination. But its performance shows the opposite. According to data from Statistics Korea, the jobless rate for Koreans under the age of 30 hit a record-high of 9.9 percent last year. The data underscores serious downsides to the government’s radical economic policy that raised the minimum wage by double digits and pushed employers to hire part-time workers on a permanent basis.

Despite urgent calls for moderation, the government is determined to push through the policy. In his New Year’s address, President Moon said that the policy of pursuing income-led growth could reduce hiring at some weak companies temporarily, but in the long run, would help strengthen the economy and increase jobs. He stayed firm in his campaign promise to push the hourly wage floor to 10,000 won ($9.40) within his term, claiming it will become the basis of a better livelihood for low wage-earners and increase household income to stimulate domestic demand.

But the reality shows otherwise. About 88 percent of the 13.6 million wage earners work for companies that employ 250 or fewer people. The majority of the 6 million people who are self-employed earn a living off daily incomes at their mom-and-pop stores.

Small business owners have stopped hiring or cut staff because they cannot afford the double-digit rise in labor cost. The public sector is no exception. The Korea Support Center for Foreign Workers, an organization under the Ministry of Employment and Labor, had to lay off seven call center workers following the hike in minimum wage.

Moon mentioned jobs 14 times in his New Year’s address. But a determination does not make jobs. Policy must reflect the reality. It must be in tune with the market needs and mechanism. Enterprises need extra workers because of flourishing business. The government must create a business-friendly environment if it really wishes to solve job scarcity.

JoongAng Ilbo, Jan. 11, Page 30
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