Change of courseThe presidential office, government and ruling party held an emergency meeting following the shocking July job data that showed the worst job conditions since the breakout of the global financial crisis. Instead of reversing the damaging income-led growth policy, the presidential office and ruling party proposed more fiscal spending and subsidies to buy time until the policy begins to generate positive results.
Jang Ha-sung, presidential policy chief, insisted that employment will pick up once the government’s policies on propping up income, innovation, and fairness in the economy take root. He asked for patience and confidence in the government. The policy chief made it clear that the government won’t veer away from the current progressive course.
Kim Tae-nyeon, the Democratic Party’s policy chief, proposed bigger fiscal expansion in 2019 to increase the budget for jobs growth. The Moon Jae-in government spent 54 trillion won (＄48 billion) to create jobs this year, but unemployment has worsened. Fiscal spending without a real fix will just waste tax funds.
The July scoreboard was jaw-dropping. The number of new jobs stopped at 5,000 against a year ago in July, sharply below the average of more than 300,000 until last year. The number of unemployed also reached over 1 million for seven consecutive months this year. The situation was harsh on people in their 40s, the bread-winners in Korean families. Over the last year, 147,000 people in that age group lost jobs, the largest since 1998.
The government must surrender its unorthodox policy of inflating income to generate growth. Yet the ruling power is unready to depart from its signature policy. It finds all kinds of excuses to defend the policy. It points to the thinning working population for reduced job numbers and the scorching climate for poor business.
Other developed economies are enjoying heydays. The United States has achieved near perfection in employment. The employment rate in Japan hovers at 77 percent, compared with 67 percent in Korea. What has caused the gap is the hike in the minimum wage and anti-business policies that have dampened corporate investment and hiring.
Reversing the economic policy direction is urgent. The country could fall into a structural job and economic slump if it does not change course immediately. A plea for confidence and patience is cruel for shopkeepers and businesses that are rapidly running out of time.
JoongAng Ilbo, Aug. 20, Page 30