How to bring back jobs
In 2006, Lee Soo-young, chairman of the Korea Employers Federation, warned the labor-friendly president at the time, Roh Moo-hyun, that companies, like unions, could go on strike. “We won’t walk out on the street,” he said, “but we can take our business elsewhere.” Companies were discreetly exiting the country, he argued, which explained the surge in unemployment. Lee was adamantly opposed to Roh’s anti-corporate policies.
Roh’s chief of staff is now president, and businesses are finding the environment as tough as it was a decade ago. Last year, textile manufacturer Kyungbang decided to relocate its factories overseas, and General Motors is loudly considering pulling the plug on its Korean operation.
But there are more companies who have chosen to leave quietly, taking jobs with them as Lee had warned before. At seven Fortune 500 Korean companies, hiring at home rose an average 8.5 percent between 2010 and 2016, but overseas hiring jumped 70.5 percent. Samsung Electronics reduced its labor pool in Korea but added more than 100,000 jobs abroad.
Governments around the world are fighting to save jobs. They’re axing taxes, lifting regulations and wooing businesses to their shores to generate jobs. President Donald Trump has offered preferential taxes for American companies returning home with their businesses. He is also arm-twisting foreign companies to expand production in the United States and raising tariffs on imports.
The Korean government has also come up with what it calls “radical measures” to generate jobs. It has proposed raising fiscal spending to induce workplaces to hire more. But these makeshift measures are dubious. Companies should not be forced or enticed with incentives. To keep them at home and help them expand, Korea must become a good place to do business.
The fundamental solutions are clear. The labor market must become flexible and regulations lifted. The government has been spending heavily, but all in the wrong places.
JoongAng Sunday, March 17, Page 34