[News in focus] Employment figures divide Moon gov’t, again

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[News in focus] Employment figures divide Moon gov’t, again

The Korean government is yet again at odds with itself over the effects of the increased minimum wage on employment.

This time around, it was Statistics Korea and the Ministry of Employment and Labor offering differing views on May’s employment data.

Statistics Korea’s data, released last Friday, indicated that the Korean economy added 72,000 new jobs in May, the lowest increase in eight years and four months. During the same month, Korea’s youth unemployment rose by 1.3 percentage points to 10.5 percent, the worst figure for May ever recorded.

Kim Dong-yeon, the minister for strategy and finance and the deputy prime minister for the economy, described the results as “shocking” and said the government’s economic team, including himself, is responsible for the situation. Statistics Korea operates as part of the Finance Ministry.

While Kim said the May data was clearly negative, the Labor Ministry said that “because of the increase in the quality of the jobs in the market,” things aren’t so bad.

On Monday, a high-ranking Labor Ministry official told reporters that the number of people covered by employment insurance went up by 332,000 in May, the largest increase in the past 13 years. Employment insurance is one of Korea’s four mandatory social insurance programs, the cost of which workers and employers share.

The statistics agency’s data covers Korea’s entire working population, whereas the Labor Ministry’s data on the number of workers with employment insurance covers permanent workers with over a year of work experience or temporary workers who have been in their current positions for over a month. Other types of employment, including the self-employed and temporary workers with less than one month on the job, are excluded from the figure.

The official also explained that the labor market is being “reorganized,” which means that the number of permanent workers is increasing. Workers with permanent positions are more likely to subscribe to social insurance programs than temporary workers.
Data from Statistics Korea showed that the number of permanent workers increased by 320,000, whereas the number of temporary workers fell by 113,000 and the number of day laborers tumbled by 126,000.

“We can interpret this as an increase in the number of workers inside the social safety net,” the official added.

Many experts, however, didn’t buy the Labor Ministry’s argument.

“The government has been expanding the social safety net through various channels, such as the ‘Durunuri’ program, and about 80,000 people were able to register for employment insurance and 130,000 became pension plan subscribers in 2017,” explained Cho Joon-mo, a professor of economics at Sungkyunkwan University. Durunuri is a social insurance subsidy program in which the government provides partial funding for employment insurance and pension plans to low-income workers. “This means the number of employment insurance subscribers went up, not because of the increase in the number of jobs, but because of such subsidy programs [provided to people that were already employed].”

This isn’t the first time that the Moon Jae-in administration’s economic officials have disagreed with each other.

Earlier this year, Finance Minister Kim and Jang Ha-sung, President Moon’s chief of staff for policy, butted heads over the effects of the minimum wage increase.

Kim said the increase in Korea’s base salary dealt a blow to the country’s hiring and said that the government should reconsider the pace of the increase. Jang, on the other hand, was adamant that it had not affected job creation.

But with recent data clearly on Kim’s side, along with other negative indicators on the Moon administration’s economic policy, local media reported last week that Jang intends to resign from his post.

The Blue House refuted the report as groundless over the weekend but the rumor of his resignation is refusing to die down.

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]
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