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Study shows low retention of jobs created by public subsidies

Following President Moon Jae-in’s initiative for his 100-day plan for job creation, a recent study argued that the government’s short-term financial support is estimated to be ineffective in the long-run in terms of job retention.

The new administration’s job creation plan was established to address and promote job growth as one of the president’s highest priorities in his first 100 days in office. On Monday, the government announced an 11.2 trillion won ($9.99 billion) supplementary budget plan to create jobs and further fuel Korea’s economy.

However, according to the Korean Labor Economic Association on Wednesday, a survey titled “Policy effectiveness estimation of job creation project” found that the longest period of employment retention following government subsidies support lasts less than 300 days.

The study, published by researchers at the Korea Employment Information Service and Korea Research Institute for Vocational Education and Training, compiled roughly 1.36 million materials from the Korea Labor and Income Panel survey and employment insurance databases, and surveyed individuals who participated in the government’s financial support and job creation project in 2012.

The paper surveyed the number of successful employment cases, along with participants’ gender, age, academic achievements, monthly wage, employment period and the number of job changes henceforth.

The participants were also categorized per government project type, including direct creation of jobs, vocational training, recruitment services, startup support and incentives for hiring companies.

The results showed that the incentives program led to the longest period of employment retention of 272 days, followed by direct job creation at 179 days, vocational training at 173 days, employment services at 162 days and startup support lasting 136 days.

The study also said that the longest period that it took to get re-employed was 269 days for participants that fell into the direct jobs categories, while employment services participants experienced the shortest period at 90 days.

“The longer the job retention period, the longer the job potential, and the longer the re-employment preparation period, the lower the job potential,” the survey results said. “To increase employment effectiveness, more attention should be paid to enhancing participants’ employment potential.”

By Julie Jackson (