At a weekly Cabinet meeting Tuesday, President Moon Jae-in called for all-out efforts to tackle the country’s worsening unemployment problem. He urged Cabinet members to take the labor market situation seriously and seek extraordinary measures in an urgent manner to turn it around soon.
What gave him a sense of urgency was the bleak job data for January, which he described as shocking.
According to data released last week by Statistics Korea, the country lost nearly 1 million jobs last month, compared with a year earlier, with the number of unemployed people reaching 1.57 million, the largest since the state statistics agency began compiling related data in June 1999. South Korea’s jobless rate rose by 1.6 percentage points on-year to 5.7 percent in January, the highest on record. The figure for young people aged between 15 and 29 stood at 9.5 percent, up 1.8 percentage points from the year before. The actual youth jobless rate, which counts in those who work less than 36 hours per week or have given up looking for jobs, soared to a record 27.2 percent.
At the Cabinet meeting, Moon outlined the extraordinary measures to be taken to bolster employment. He vowed to carry out a plan to create 900,000 jobs in the first quarter of this year through collaboration among the central government, local governments and public institutions.
That pledge affirms his administration will continue to adhere to its ill-conceived policy to add jobs by spending taxpayers’ money rather than encouraging private companies to increase investment and employment by forging more business-friendly conditions.
Since assuming office in May 2017, the Moon administration has spent more than 80 trillion won ($72.3 billion) financing expanded employment programs only to see the largest-ever loss of jobs last month. January’s grim job data is all the more embarrassing for Moon, who campaigned on a pledge to prioritize job creation. Many of us still recall his days as the opposition leader, when he asserted that about 1 million jobs could have been created with the 22 trillion won spent on projects to restore the country’s four major rivers under former President Lee Myung-bak’s administration in the early 2010s.
The budget set aside to bolster employment since Moon took office has been spent mostly on temporary jobs for senior citizens. In the coming months, the government might be able to put forward better employment figures backed by the reinforcement of fiscally sponsored job programs. But it is only a matter of time before job figures deteriorate again.
The Moon administration’s misguided policy has particularly frustrated young job seekers, who are having difficulty finding secure, well-paid jobs.
What should be noted is that the country’s employment conditions began to worsen even before the coronavirus outbreak started early last year, as the Moon government imposed stricter regulations on corporate activity and introduced a set of pro-labor measures, including steep minimum wage hikes and inflexible limits on overtime.
At the Cabinet meeting, Moon said efforts would be made to expand the private sector’s capacity to increase employment through regulatory reforms and incentives for investment. But his remarks ring hollow to the business community, which is frustrated at the discrepancy between Moon’s rhetoric and his actions.
Moon has done little to prevent the ruling Democratic Party of Korea, which retains an absolute majority in the 300-member parliament, from ramming through a raft of bills aimed at tightening regulations on companies. Ruling party lawmakers are now working on measures that would impose even wider restrictions on corporate activity.
What should draw attention from Moon and ruling party legislators are the results of a recent survey of 230 local firms on their business plans. More than 30 percent of the respondents said they were considering cutting domestic employment, mainly due to the increased restrictions, with a quarter of them saying they were thinking of moving their workplaces abroad.
The worsening unemployment problem requires Moon and the ruling party to depart from their ill-conceived policy direction and focus on forging corporate-friendly conditions to help prompt private firms to increase investment and add the kinds of jobs preferred by young people.