The employment problem

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The employment problem

There were many who could not comfortably enjoy the Lunar New Year’s holiday. Jobs are scarce for both college graduates and retirees. Precarious jobs in wholesale and retail businesses, cleaning, security and hospitality services are being reduced because of a hike in the minimum wage. Employers have turned lukewarm about new investments and hiring due to the surge in labor costs.

The latest jobs data underscored the bleakness. The number of jobless reached 1.02 million in January, the highest for that month in eight years. The actual unemployment rate that includes people between jobs hit 11.8 percent. One out of 10 working people was more or less out of work. The February data will likely be more depressing as GM Korea is closing a factory in Gunsan and many workplaces have scaled back through early retirement programs. Shipyards in Geoje on the southern coast have been laying off.

Applicants for unemployment allowances are snowballing. New applicants for state allowances for laid-off workers totaled 152,000 in January, the highest since the data started being compiled, up 37,000 from a year ago. The government’s policy — a sudden spike in the minimum wage and forced conversion of contract workers to the permanent payroll — has actually hurt jobs. At the current rate, the government’s so-called income-led growth policy could end up damaging both incomes and growth. Both progressive and mainstream economists in a recent forum questioned the effectiveness in the government’s artificial wage increases as a means to stimulate growth.

Yet the government is stubborn. It is determined to see through the president’s campaign promise. Ruling Democratic Party floor-leader Woo Won-shik defended the minimum wage increase, claiming the hike cannot be blamed for the deteriorating jobs data. He blamed landlords and franchise operators for hurting mom-and-pop stores.

The Moon Jae-in government must stop such empty political rhetoric. Moon mentioned jobs 14 times in his New Year’s address. Deputy Prime Minister for the Economy Kim Dong-yeon is co-heading a new government office to create jobs for the young. Nothing will work as long as the fundamental direction of policy does not change. Over the last decade, the government has come up with 21 measures to promote jobs for the young. Vitality of the economy is the key to solve job scarcity. Increasing the number of civil servants and pressuring companies won’t help. Regulations must be removed to encourage new investment and hiring.

JoongAng Ilbo, Feb. 15, Page 26
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