The employment tragedy
An announcement Sunday by the Korea Economic Research Institute (KERI) shows the grim reality facing the Korean economy. In a survey of large companies’ recruitment plans for the first half of the year, the state-funded think tank said that among 500 large companies in Korea, 63.6 percent have no plan to hire college graduates or have yet to draw up plans for this year. Last year, that share stood at 41.3 percent.
Such an employment disaster is almost to be expected of the Moon Jae-in administration. It was inevitable from a liberal government pressing ahead with one policy after another denying market principles, part of its “income-led growth” concept, which included a scheme to force large companies to share profits with contractors struggling with the pandemic. In a business environment in which deregulation is the key to the survival of companies, how can you expect them to hire more workers than before when the government is determined to restrict their rights to operate businesses the way they care to? On top of that, the pandemic has dealt a heavy blow to their ability to recruit workers.
Our policymakers must accept the dire reality faced by six out of ten large companies in Korea. The government has sought to sustain employment by creating part-time jobs for the young and old. But after the tax-funded job programs end, a dark reality will surface. In January, the number of unemployed persons rose to 1.57 million and the jobless rate soared to 5.7 percent. If the corporate sector — the primary source for quality jobs — scales back recruitment, our employment situation will get worse.
That sharply contrasts with the case of Japan, where companies announced their recruitment plans for this year starting March 1. Japan also suffered a decline in employment after the outbreak of Covid-19, but companies are trying to hire new workers back. According to a recent survey by Recruit Group in Japan, companies with more than five employees plan to hire 24.8 workers on average this year compared to 24.7 last year. The Nikkei has reported that companies are engaged in a heated competition to recruit talent.
In Korea, college graduates have trouble finding a job. President Moon hurriedly resorted to creating jobs in the public sector, but those jobs are not that productive, not to mention hard to get due to an avalanche of applications.
Korea’s great independence fighter Ahn Chang-ho (1878-1938) famously said, “Despair leads to the death of our youth. If our young generation dies, our race perishes.” Young people in this country are now suffering from despair. Decision-makers in the government must listen to complaints from companies and help them hire young people before it’s too late.