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[Editorial] Job policy backfires

Policy focus must move from labor to business to stop worsening job situation

Job data released by Statistics Korea on Wednesday show the employment policy of the Moon Jae-in administration has backfired.

The number of jobs increased 97,000 on-year in 2018, dipping below 100,000 added for the first time since 2009.

However, if you take a closer look, the job situation is even more concerning.

The number of nonfarming, private-sector jobs decreased 16,000 on-year in 2018. This figure had increased 256,000 in 2017 and 239,000 in 2016 year-over-year.

It is the first decrease in nonfarming, private-sector jobs since 2009. Though the total number of jobs increased -- by the smallest number in nine years -- the private sector shed jobs.

Other data are bleak, too. The employment rate fell for the first time since 2009. The jobless rate rose to a 17-year high.

Probably the biggest reason why many nonfarming, private-sector jobs vanished is business downturn. As long as the business situation does not look up, jobs will likely continue to disappear. As things look right now, job prospects are not bright.

Of course, layoffs due to restructuring in a few industries for survival in times of an economic downturn are inevitable. However, job losses due to government policies should be avoided as much as possible.

Drastic hikes in the minimum wage, among other factors, contributed to job losses, particularly for economically vulnerable people. And an inflexible cutback on working hours hit both low-income wage earners and employers.

The measures taken despite opposition and concerns in the private sector to comply with Moon’s income-led growth policy put a damper on sagging business conditions.

Job losses among low-income groups worsen income inequality. Low-income classes, among others, lost jobs while employees in highly paying stable jobs saw their incomes rise steadily despite difficult economic conditions.

The government needs to strengthen an economic safety net for those impoverished.

More important than that in the long term is to take measures to increase employment in the nonfarming, private sector, especially manufacturing industries.

To expand employment, new industries must be developed, while existing industries must recover vitality.

The Moon administration has been failing in both domains. It tried to create jobs in the private sector by creating ones in the public sector and to propel growth by increasing income -- the minimum wage for that matter.

The minimum wage was raised sharply twice to benefit low-income workers, but ironically, many of them simply lost their jobs. The reason was simple: Small businesses could not afford increased labor costs.

Policymakers were shortsighted. They failed to consider both sides of the minimum wage hike.

Hiring more people in the public sector may have contributed to increasing overall employment.

But creating jobs this way had hard-to-redress side effects.

The policy did not only fail to boost economic growth. It increased fiscal burdens on future governments by enlarging the public sector.

The Moon administration has vowed to deregulate the private sector, but a bigger government will likely increase regulations.

The mandatory reduction of working hours added fuel to the fire by raising labor costs for businesses trying to employ workers for as long as they did.

The shorter workweek should have been enforced flexibly depending on industries, but policymakers did not listen.

The root cause of the worsening job situation lies in ideologically biased policies.

Moon has emphasized justice, equality, human rights, welfare and labor, but sticking to these ideological concepts entangled economic issues rather than fostering business vitality.

The administration has pursued pro-labor policies and alienated companies, particularly big ones.

As a result, its policies have protected and strengthened the interests of labor unions, particularly the vocal unions of large companies that already pay high wages to employees.

On the other hand, labor-friendly measures demotivated businesspeople and stunted growth through competition and innovation.

Industries are undergoing inevitable structural changes due to the rapid development of information and communication technologies and automation. Still, Korea’s labor circles stick to the relics of an industrial age.

If it fails to reform labor, labor in the current form will die out, let alone job creation. It is time to shift the focus of policy from labor to business.

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Korea Herald daum