Stop the backpedaling

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Stop the backpedaling

According to Statistics Korea, only 19,000 new jobs were created in January compared to the same period of the previous year. That’s a terrible figure given the monthly average of job seekers — 300,000 — who were able to find jobs in 2017. Even this paltry increase was only possible at the cost of people’s tax money. The Moon Jae-in administration keeps promising to increase public sector jobs to make up for the jobs disappearing in the private sector.

While the number of new hires in the over-65 age group grew by 144,000 in January, the figure for those aged between 15 and 65 decreased by 125,000 in the same month. That means Korea’s employment situation would have been even worse if the government had not spent money to create short-term jobs for the elderly. The total number of jobless reached a whopping 1.22 million, the largest since 2000 when the bursting of the IT bubble hit the Korean economy and there were 1.23 million.

This disastrous job situation was largely caused by rapid hikes in the minimum wage. For instance, 183,000 jobs disappeared in industries such as wholesale, retail, lodging, restaurants and facility maintenance. The quality of jobs vociferously championed by the Moon administration also plunged as seen in the data: While the number of people working for more than 36 hours per week decreased by 338,000, the number of those working for less than 36 hours a week increased by 420,000. That means employers are increasing the share of part-time workers to cut their mounting labor cost after the government’s increases in the minimum wage. The number of self-employed businesspeople hiring staff also fell by 49,000 last month.

The government’s disastrous income-led growth policy hurts the vulnerable most, including part-time workers. All Koreans know the adverse effects of the government’s untested growth policy. According to a Labor Ministry survey, 77 percent of the people said the government must revamp the way it determines the minimum wage.

Nevertheless, the government keeps its blinkers on. As long as it remains stubborn, we cannot overcome our unprecedented employment crisis. Needless to say, jobs are bound to decrease if wages are raised artificially.

Economists know you cannot achieve growth with arbitrary hikes in income. If the backpedaling continues, we will fall into a vicious cycle of employment cuts followed by dwindling consumption, investment reduction and a reduction in employment. The time has come for the government to stop its ludicrous economic experiment.

JoongAng Ilbo, Feb. 14, Page 30
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