‘New Deal’ lacks forethought

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‘New Deal’ lacks forethought

Kim Ki-chan
The author is a senior writer on labor affairs at the JoongAng Ilbo.

The so-called Korean-style New Deal initiative to combat the coronavirus crisis and find new growth for the future turned out to be all make-believe and full of bluster. The massive spending scheme to generate new jobs and industries could mostly go to temporary, unskilled hires who would settle for paltry pay. The first part of the plan was establishment of the so-called “data dam,” or industrial applications from the troves of data. The program proposed training and hiring 8,000 in the field of artificial intelligence and software.
But the details hardly lived up to the rhetoric. They were mostly hired for three-month periods, paying 1.8 million won ($1,511) a month. The work was mostly data entry. Few would regard the program as training for “key talents for the New Deal” and the part-time jobs will disappear when the budget is spent. The government may argue the job falls under the “digital” category, but it is making the same argument as it did when it created jobs for young people that were simply patrolling university campuses to check if lights were turned off in empty classrooms.
The New Deal programs are touted to create jobs. Employment policy must be deliberated for a long time to minimize the side effects and create lasting positive effects on the economy. It should not be improvised as the grandiose “Korean-style New Deal.” The economy has suffered enough from experimental policies over the last three years.
Germany offers a good example of an economic rebound from careful and well-baked policies. The Spiegel on July 27 reported the July business climate index -- compiled by the Munich-based Ifo Institute for Economic Research -- extended gains for a third month. The survey suggested companies were generally content with the business environment. But they were reserved about the outlook. The institute head Clemens Fuest observed the Germany economy was bottoming out. Another media outlet reported that the labor market in Germany stayed stable regardless of the coronavirus pandemic.
Korea cannot be deemed to be “performing miraculously” when compared to Germany. The economy endured its worst contraction in 22 years during the second quarter, entering a technical recession with growth in the negative for two consecutive quarters. The government should be embarrassed by its poor score. Yet it remains self-indulgent.
The difference is in persistent restructuring efforts in Germany. From the groundbreaking Hartz plan in 2003 to Agenda 2010, Germany implemented four rounds of structural reforms. German Chancellor Angela Merkel has cut corporate tax, employers’ share in employment insurance and reduced union participation in management.
The German government recently embarked on labor reform oriented toward the digital economy, dubbed “Labor 4.0.” In 2015, it outlined labor and social reforms in the Green Paper. The paper was a book of topics from which policymakers and others could draw. It stated the challenges in the labor market looking ahead to the fourth industrial revolution. Two years later came the White Paper on Work 4.0, in January 2017, published by the German Ministry of Labor and Social Affairs.
In the pretext, it said eight-hour workdays, improving work conditions and banning child labor used to be the goal of labor policy. But today, working with a notebook on the beach or receiving flexible work hours through app-based scheduling has become ideal. The White Book aimed to create “Gute Arbeit, or good labor.” The country stressed “good labor” not “good jobs.” It cited a flexible labor market, quality education, vertical management culture, performance-based pay systems and reliable social security as the means to reach an environment for good labor. Society aimed to move toward a market that provides a flexible, quality and individualistic labor environment along with reliable society security.
Such a vision befits the New Deal for digital era. Massive spending without deep thought and vision cannot strengthen and advance the economy. What’s normal today may not be so in the future. Today’s Korea chained to a labor policy from the industrialization period of 1970s and 1980s won’t succeed. The government must work toward achieving a “good labor” market for the future, so that the future generations can live in greater security and freedom.
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