[Editorial] Way to create jobs

By Korea Herald

Government should foster business starts, prevent side effects of bigger public sector

  • Published : May 26, 2017 - 17:52
  • Updated : May 26, 2017 - 18:00
The employment situation board installed in President Moon Jae-in’s office Wednesday vividly shows his strong will to create jobs.

Moon and his secretaries can take a glance at key labor statistics including employment rate, jobless rate, youth jobless rate, wage disparity and working hours.

Job creation was one of his key election pledges. His first executive order, signed on May 10 when he took office, was to establish a presidential committee on job creation.

He said he would check the display every day and went further to say he would make the board show the employment situations of large companies as well.

Youth employment has been an urgent and difficult issue. The youth jobless rate rose to 11.2 percent in April, the highest since 1999. It is right for Moon to pay particular attention to job creation.

More important will be the results.

Moon said the market has failed to create jobs, hence the need for the government to hire more employees as a last resort.

He may be expecting the public sector to start the virtuous circle of employment and growth in the private sector.

Next month, the government will decide on a schedule for the public sector to hire 810,000 jobs as he pledged, and plans to submit a supplementary budget bill to the National Assembly to carry out the schedule.

The public sector cannot be the right path to job creation. A bloated public sector will drain the economy through a heavy fiscal burden, hikes in public utility fees, fall in productivity and lax management.

It is undesirable that many young people work in a sector not directly related to economic activities.

Now that preparations have begun to expand the public sector, efforts are needed to minimize the side effects.

High unemployment is attributable to low growth, so spurring economic expansion is imperative. Corporate investments are the right way to boost growth. The government should try to find out why companies avoid investing in Korea and address those problems.

Rigid labor mobility and militant unions have been blamed for discouraging investment in Korea.

Around the time when Moon unveiled the situation board to the press, French President Emmanuel Macron met union leaders on Tuesday to sell his plan to reform the labor market as part of an effort to boost hiring. He tried to convince them the labor market should be flexible in order for the country to get out of the rut of low growth.

Moon has not mentioned labor reform or evils done by hardline unions, which have threatened the national economy with excessive demands.

The universally valid way to create jobs is to foster business start-ups. About two-thirds of new jobs in the US have been created by high-tech venture businesses. China is promoting startup companies as its economy slows. An average of 12,000 new companies were registered each day in China last year.

According to a report from the Organization for Economic Cooperation and Development, as of 2014, South Korea’s small and medium-sized enterprises ranked 33rd among the 34 surveyed countries in terms of recognition of entrepreneurial opportunities. Compared to 70.1 percent of adults in Sweden who saw good opportunities in starting a business, 12.7 percent were able to do so in South Korea.

Kim Jin-pyo, chairman of an advisory committee for state affairs planning, vowed to build business start-up boom. It is the right move.

The first thing to do to foster the boom is to deregulate business startups. With the public sector set to hire more people, however, the government should be alert to avoid the trap of going against deregulation. As the public sector becomes bigger, the number of regulations tend to increase.

There is little hope for sustained growth in a country where many young people prefer established public-sector jobs to starting businesses with entrepreneurship.

The government should strive to create an environment where young men and women can experiment with new ideas and make bold challenges.