Prudence is neededJobs in Korea are in a downward spiral. The losses have not been temporary. The prolongation points to a trend of structural stagnation and calls for an urgent revisit to the income-led growth policy. Authorities must look at the job status quo with objectivity and sobriety.
According to the June job data released by Statistics Korea, the number of the employed totaled 27,126,000 in June, an increase of 106,000 from a year ago. Throughout last year and up until January, payroll additions stayed above 200,000 or 300,000. After peaking with addition of 334,000 in January, the number dangerously hovered around 100,000 from February to June.
The average increase of 142,000 in working population in the first six months is less than half of the government’s job growth target of 320,000. The last time Korea saw such a slow increase in new hires was in the aftermath of the 2008 financial crisis.
Two features in the June data were job losses in the wholesale, retail, lodging and restaurant sector where hiring hinges on business conditions, hourly wage level and the manufacturing sector that is responsible for a large work force. Payroll in wholesale, retail, lodging and restaurants — most sensitive to the 16.4 percent jump in the minimum wage — fell by 247,000. The government claims it is premature to judge the impact of the minimum wage hike, but industry watchers say the results on jobs are obvious from the losses in numbers over the last six months.
To prevent further harm, the government must first moderate the pace in raising the minimum wage. The labor sector remains stubbornly selfish. It proposed 10,790 won ($9.62) for the hourly minimum pay for next year, up 43.3 percent from this year’s 7,530 won. The government must recognize the harms from a steep rise in labor cost and persuade the labor sector.
It must accelerate promotion of innovation. Companies must invest to provide jobs. Increases in the working population can generate spending and growth in domestic demand. The government must quickly remove all unnecessary regulations to provide new business opportunities for investment.
Income can only increase under a growing economy. Artificial inflation of income to stimulate growth does not work in the real economy. The government must admit it made a mistake and clear the way for the economy to grow.
JoongAng Ilbo, July 12, Page 30