Stanching the layoffs

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Stanching the layoffs

Massive layoffs caused by the Covid-19 outbreak will hurt Korea badly. The number of people who say they simply “gave up looking for jobs” topped 2.37 million in March. Those who had to take a leave of absence for “unavoidable circumstances” soared to 1.6 million, an over fourfold increase from the same period last year. In the meantime, new hires decreased by 195,000. Most of them are by mom-and-pop store owners in the services sector. The people losing jobs are young part-timers and freelancers. Big companies are no exception. Employees at airlines and shipbuilders, in particular, are increasingly being put on unpaid leaves.

In a ceremony Sunday to mark the 60th anniversary of the April 19 Revolution, President Moon Jae-in underscored the need for employers and employees to cooperate to maintain as many jobs as we can. As Moon stressed, government effort alone cannot solve the problem. “We will first give aid to companies that keep their workers,” he said. The key to tackling a plethora of challenges from the outbreak must start with protecting jobs.
As Moon indicated, the government cannot address a massive layoff crisis through gargantuan spending alone. Its limitations have already surfaced as seen in a whopping 900 billion won ($739.5 million) in jobless benefits claimed in March alone. If the government wants to settle the unemployment crisis with fiscal inputs, it will soon run out of dough.

Emergency relief is no different. The Moon administration allocated 9.7 trillion won in the beginning, but that will snowball to 13 trillion won if the government expands the scope of recipients to include everyone. How will the government react if the Covid-19 crisis lasts for two or three more months? It could probably find fiscal resources by adjusting expenditures and issuing government bonds. But what about next time?

Given such dire scenarios, the key to preparing for a post-coronavirus economy is ensuring companies maintain employment. To do that, the government must scrap its anticorporate, antibusiness policies. Economic lobbying groups have demanded the government ease its enforcement of the 52-hour workweek. Companies big and small are having trouble producing products on time due to it, in sharp contrast to Korea’s major competitors that allow flextime when the need arises.

In the post-coronavirus era, a new set of global standards will appear in economic, industrial, educational, public health and security areas. To brace for the shift, the government must ease stifling regulations across the board. Otherwise, Korea Inc. can not deal with the so-called untact trade. If the government fails to create environments for enterprises, it cannot help the jobless army return to work.

JoongAng Ilbo, April 20, Page 30
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