Editorial Notes

Misplaced focus for boosting employment: Korea Herald editorial

The paper says the South Korean government's tie-up with big unions to boost employment is misguided and does not address the needs of young job seekers.

A man with an umbrella walks through the Myeongdong shopping district in Seoul on January 26, 2021.
A man with an umbrella walks through the Myeongdong shopping district in Seoul on January 26, 2021.PHOTO: AFP

SEOUL (THE KOREA HERALD/ASIA NEWS NETWORK) The government last week announced a plan to spend 5.9 trillion won (S$6.97 billion) on creating 1.04 million jobs for young people this year. 

The plan was hurriedly patched together following an earlier release of gloomy job data for January. Figures from Statistics Korea showed the unemployment rate for people aged 15-29 reached 9.5 per cent that month, up 1.8 percentage points from a year earlier. The actual youth jobless rate, which counts in those who work fewer than 36 hours per week or have given up looking for jobs, soared to a record high of 27.2 per cent.

The plan disclosed last week cannot be expected to ease the growing woes faced by young job seekers, who are struggling to find opportunities to land secure, well-paid jobs. Most of the jobs for youth to be created with taxpayers' money are low-paid temporary and part-time ones.

Jobs preferred by young people could be added mainly by private companies. But a recent survey of major local firms suggests it will be hard to see an increase in the number of decent jobs in the private sector down the road.

In the survey of the country's 500 largest companies in terms of turnover, 17.3 per cent of the respondents said they would not hire new employees in the first half of this year, with 46.3 per cent having yet to draw up a recruitment plan for the period. The numbers marked a sharp rise from the corresponding figures of 8.8 per cent and 32.5 per cent in a similar poll a year ago.

As one might expect, the largest portion of the companies polled, or 51.1 per cent, cited the pandemic-caused economic slump at home and abroad as the reason for their decision to reduce hiring from the same period last year.

What should draw more attention from government officials is that 12.8 per cent said rigid employment conditions had held them back from increasing employment, followed by 8.5 per cent who singled out a steep rise in personnel expenditure.

These reasons have much to do with an ill-conceived policy carried out by President Moon Jae-in's administration since it assumed office in 2017. It should be noted that the country's labour market began to worsen even before the coronavirus outbreak here early last year, as the Moon government dampened corporate activity by enforcing stricter regulations and taking a set of pro-labour measures, including steep minimum wage hikes and a rigid implementation of the shortened workweek.

The latest job data from the state statistics office showed the number of employed people in the country fell by 982,000 from a year earlier to 25.8 million in January, marking the steepest on-year decline since December 1998. The number of jobless people reached 1.57 million that month, the largest since June 1999.

Government officials were quick to attribute the unimpressive job data to a tightening of social distancing rules amid a flare-up in Covid-19 cases, which resulted in massive job losses in face-to-face service sectors. But the data should rather be seen as suggesting that the Moon administration's push to create jobs with increased fiscal spending has reached its limits.

It should step up efforts to forge corporate-friendly conditions by accelerating deregulation and readjusting pro-labour measures to encourage private firms to expand investment and add jobs preferred by young people.

What is crucial to increase youth employment is labour reform to make it easier for companies to employ and dismiss workers. But the Moon administration and the ruling Democratic Party of Korea have back-pedalled on the thorny task.

Companies were further discouraged from hiring new employees by the parliamentary passage in December of a labour law revision that allows dismissed workers to join a union, and allows labour organisation officials outside a company to set foot on its property. Still, the ruling party agreed with a major labour umbrella organisation this week to strengthen their solidarity and push through more labour-friendly legislation. This move comes ahead of key mayoral by-elections in April and the next presidential election to be held a year from now.

Additional measures to consolidate the vested interests of unionised regular workers at large firms would further reduce opportunities for young job seekers to land decent jobs. If the Moon government truly intends to carry out its blemished pledge to prioritise job creation, it should shift the focus from the politically calculated tie-up with labour unions to the ever-growing woes of jobless people and low-paid temporary workers.

The Korea Herald is a member of The Straits Times media partner Asia News Network, an alliance of 23 news media organisations.