Unemployment shocksThe number of people who received unemployment allowances from their employment insurance policy after losing their jobs reached a record level in the first quarter of the year. According to data provided by the Korea Employment Information Service, the number of jobless who received unemployment benefits hit 628,000, the highest number since 2010 when the government agency started to calculate the beneficiaries on a quarterly basis.
The total allowances they received in the first quarter amounted to 1.49 trillion won ($1.39 billion), a 206.5 billion won increase from the same period a year ago. As those who cannot find a job even though they are willing to work — a category of so-called involuntary unemployment — are only eligible for the benefits, the whopping amount of money they received reflects the grim reality of our employment situation.
There are even gloomier statistics than that. The number of jobless exceeded 1 million for two consecutive months — February and March — while the youth unemployment rate soared to 24 percent. That mostly stemmed from the government-enforced hikes in the minimum wage. As a result, the number of those who found temporary or part-time jobs most vulnerable to the increase in the minimum wage decreased by 181,000 in the first quarter compared to the same period of last year, not to mention 98,000 layoffs in the businesses of wholesale, retail, restaurants and lodging.
The drastic increase in the number of unemployment allowance recipients was forewarned when the liberal Moon Jae-in administration last year pressed ahead with a rapid increase in the minimum wage. The public is quite alarmed to see such adverse effects.
A bigger problem comes from the worsening livelihoods of the people. According to the National Assembly Budget Office, South Koreans’ real incomes rose by 1.6 percentage points in the last quarter of 2017, but their disposable income decreased by 2.8 percentage points. That means the public is increasingly spending less due to remarkable increases in tax and welfare payments. That bodes ill for our economy as deepening unemployment led to significant cuts in their spending.
If alarm bells are ringing from every direction, the government must correct problems with its economic policy. How can it expect successful results if it puts the cart (income growth) before the horse (corporate investment)? The government must find answers in bold deregulation. That’s the only way to rejuvenate the sagging economy.
JoongAng Ilbo, April 16, Page 30