The government on Wednesday vowed to create 550,000 jobs directly with 3.6 trillion won ($2.9 billion) in response to the unemployment shock from the novel coronavirus.
It will also create a 40 trillion won fund to prevent massive layoffs in key industries.
Most of the jobs to be created with taxes are temporary. They are similar to the part-time jobs created for seniors such as school crossing guards and picking up cigarette butts.
They are not long-term, sustainable jobs. To protect employment is an urgent issue but it cannot be achieved only with fiscal spending. They must go side by side with system improvement to revive companies’ ability to survive and revitalize market functions.
For the economic development, jobs should be created by the private sector. To boost job creation, regulatory obstacles to business activity should be cleared and the labor market must be made flexible.
Reportedly about 1,300 bills that limit business activities are pending in the legislature. They include commercial law amendments that threaten major stockholders’ managerial control. Another bill calls for companies to pay 10 percent of revenue as a penalty when they make errors damaging the interests of shareholders and consumers.
These bills will likely be approved in the next-term parliament dominated by the ruling party.
Chief executives of companies are said to be subject to about 2,200 regulations that punish them criminally.
This regulatory environment will only drive corporate investment out of Korea, eliminating jobs.
Even before the outbreak of the novel coronavirus, the Moon administration implemented pro-labor policies.
It raised the minimum wage sharply and shortened the workweek, pulling down labor productivity and increasing burdens on employers.
Furthermore, Moon’s policy to wean the nation from the nuclear energy broke down the nuclear industry ecosystem, and many jobs disappeared.
If the government abandons its nuclear phase-out policy, jobs will increase and manufacturing costs will decrease, raising corporate competitiveness.
Nevertheless, the Moon administration and the ruling party have no intention of scrapping the policy.
If it wants to create sustainable jobs, it must change policies that undermined employment.
Above anything else, it ought to change pro-labor policies.
Businesses must try hard to avoid mass layoffs. But if they maintain costly but unproductive labor, they will likely fall behind even when business conditions return to normal.
The government attached preconditions to company bailouts in key industries. One of them is for a company to maintain its total number of employees. It is important to maintain employment, but human resources reduction is inevitable depending on the situations of individual companies.
The government effectively accepted labor demands for a ban on layoffs. Indiscriminate dismissals must be prevented, but the precondition of maintaining employment must be applied flexibly.
When companies are at the risk of going out of business, unions make egoistic demands that will make it harder to manage a business, not to mention joining self-rescue efforts.
The Federation of Korean Trade Unions endorsed 66 of the ruling party candidates, and 51 of them won the general elections.
A day after the elections, the federation called on the party to keep its promises to respect labor. It demanded severance pay regardless of the amount of time retirees worked for companies, and tougher conditions for mass layoffs.
The Korea Finance Industry Union supported 71 DP candidates and 52 of them won the elections. The union opposes performance-based pay systems and demands the abolishment of the salary peak system, and later retirement ages.
The Korean Confederation of Trade Unions demands a ban on employee dismissals and asks companies to spend their internal reserves to secure jobs.
Their demands require a unilateral sacrifice on the side of companies. But they seek their own interests in a perilous situation requiring labor and management to share pains.
Moon emphasizes labor-management consensus, but it is questionable if it is possible to reach a reasonable accord with such selfish unions.
If companies vanish, so will jobs.