Markets create jobsJob security was President Moon Jae-in’s first campaign promise. He vowed to defend jobs against challenges from demographic shifts and technology advances. He promised to increase public sector jobs, reduce work hours and raise our hourly minimum wage to 10,000 ($8.60) by 2020. Jobs were mentioned as top priority in his inauguration speech. The first public event he staged as the president was to visit the Incheon International Airport, where he pledged to convert every contract worker in the public sector to the permanent payroll. He established the presidential Committee on the Fourth Industrial Revolution and appointed a senior secretary for job. The message was clear: the government will use all its power and resources to create jobs.
But the results have been disappointing. The headline numbers are not bad. A total of 348,000 jobs were added in September against a year ago, and the employment rate reached 61.7 percent — the highest for September in 23 years. The government has been all buoyant. However, the reality is the opposite. Temporary hires who are employed for less than 36 hours a week totaled at 730,000. Jobs for people in their 60s and above increased by 380,000, whereas those for people in their 30s and 40s have been declining for 24 straight months. The manufacturing sector which offers decent-paying long-term jobs has shed jobs for the 18th month in a row. As many as 1.18 million full-time jobs that employ for more than 36 hours per week were lost over the last two years. During the time, the public sector was forced to convert contract workers to permanent status.
A policy dictated by the government instead of market conditions brought about the disaster. Jobs are created by the private sector. The public sector at best can employ 1.5 million people. The number makes up less than 5 percent of the entire salaried workers. But the government has confused its public role and the private sector’s role. It did not respect the latter. Steep increases in the minimum wage and a radical cut in statutory work hours have dampened employers. Employers, big and small, had to reduce the number of their workers due to a sharp rise in labor cost and waning productivity.
To create jobs, the government must first change its perspective. It must remember that jobs come from the private sector. Companies are responsible for 95 percent of the employment. To encourage them to hire more, business environment should be right. The government must keep its involvement to the minimum. Instead, it must spend tax funds to stimulate corporate investment and employment.
Actions to remove unnecessary regulations and allow more flexibility in the labor market also are also needed. Government offices differ on policies, as seen in the fiasco over van-hailing service operator Tada. The Korean Confederation of Trade Unions remains assertive thanks to its help in getting the liberal president elected. Only the government can make the fixes. To achieve its top goal on jobs, it must respect the private sector.
JoongAng Ilbo, Nov. 7, Page 30