The tragic ending of crocodilian policies

Kim Dong-ho

The author is the editor ofeconomic news at the JoongAng Ilbo.

South Korea’s Generation MZ — those in their 20s and 30s — live in a world different from that of the older generation. Their country has become the 10th largest economy in the world. But they cannot find a decent job or home. For the first time in Korean history, the younger generation would become poorer than their parents’ generation when they reach their age.

Their tough life owes largely to the radical policies of the liberal governments. The Roh Moo-hyun government enacted a law in July 2007 to protect the so-called irregular workers who have to renew their contract every two years and who receive less pay than their full-time counterparts while doing the same job.

The purpose of the law was understandable to some extent. To discourage employers from hiring employees on a irregular basis, the law mandated them to put them on a permanent payroll after two years. But the law came to fixate the young workers to the “irregular” label, as companies began to lay off irregular employees every two years. Enthusiastic and smart recruits quietly exited after their two-year term expired. The brief work of young recruits has become commonplace in worksites and settings in Korean movies and dramas.

HR staff’s primary role has become to sack the irregular workers when their two-year time is up. Young people are forced to migrate from one irregular work to another. Due to job insecurity, they cannot be economically independent. They cannot even think of getting married. The result is the world’s lowest birth rate of 0.78. It is the sad consequence of a hypocritical policy that pretended to be good. Could such a malicious policy be the legacy of the liberal camp, whose prime value is to uphold justice and fairness?

Despite the cruelty, the law is being sustained. The serious side effects had been foreseeable, but once a law is enacted, it is hard to undo it. If not for the law, an employee hired on an irregular basis could have been elevated to permanent status, as the practice was customary before 2007. As long as the law exists, a recruit hired on an irregular basis can hardly work beyond two years.

The 52-hour workweek implemented by the liberal Moon Jae-in administration in 2019 is no exception. It was a collaborated byproduct of politicians with anti-market and anti-business perspectives and mighty unions of large companies that make up only 4 percent of the working population. It was strongly protested by not only employers responsible for their business but also mainstream economists. The rigid shorter work hour system has been suffocating small and mid-sized enterprises (SMEs) that hire 88 percent of the entire salaried workers. Companies are casually asked to employ more workers to fulfill their work within shorter work hours. They fall into the smaller business category as they can’t afford big payroll.

SMEs often do not have a regular workload, and their work is quite seasonal. They pay their employees just half of what large companies offer. Workers’ income can increase when they work extra hours during peak season. But they had to accept the 52-hour workweek term the liberal administration pressed ahead for them to enjoy longer personal life after work.

As a result, SMEs have become chronically short of the labor force. To keep up living, workers must take up side hustles as substitute drivers or delivery workers. The government under conservative President Yoon Suk Yeol tried to flex the rigidity in the 52-hour workweek rule, but it has been making little progress in the face of vehement resistance from the majority Democratic Party. It is that hard to untangle if the knot is too tight.

The fallout from a sharp increase in the minimum wage was also calamitous. The Moon administration pushed for the 10,000 won ($7.7) minimum hourly wage. Owners of self-employed businesses who no longer can afford expensive part-time workers chose to install kiosks and adopted the digital payment system and service robots. The amendment to the Grain Management Act to mandate government purchase of surplus rice the DP had railroaded was also a populist idea. The bill would force the government to buy excess rice if prices fall. It would only aggravate the oversupply and waste taxes. This is the reality of the policies purported to help public livelihood.

The three laws for tenants’ rights pushed under the Moon government also worsened public lives. Tenants had to move out of their homes to cheaper multi-residential villas after homeowners demanded higher rent from them due to heavier property taxes on their houses. The phenomenon bred scammers who purchased hundreds of villa units to exploit the underprivileged. After home prices tumbled from the spike in interest rates, the prices of apartments often became cheaper than rent. These are the disastrous results of populist policies.

The political front behind these policies has formed a policy forum named after the home of Chung Yak-yong, one of the greatest thinkers of the Joseon Dynasty. The scholar’s home was called “Saeuijae,” meaning the house of upright thought, speech, behavior, and appearance. To meet the true meaning of the name, the liberal force must first examine the disastrous results of its past policies.