President Moon Jae-in launched a job creation committee as his first presidential act in May shortly after his inauguration.
He set up TV monitors showing employment data in the presidential office and designated job creation as the top priority of his administration.
But recent employment indices have gone south rather than north.
According to Statistics Korea on Wednesday, the jobless rate for young people aged 15 to 29 rose to 9.4 percent last month, up 0.1 percentage points from the same month last year.
In terms of August figures, it marked the highest in 18 years, dating to 1999.
The number of unemployed topped 1 million again after two months.
Of course, it is unreasonable to expect the recently approved revised supplementary job budget of 11 trillion won ($9.7 billion) to produce major results in such a short time. A jobs crunch is a structural problem to some extent. And yet for the Moon administration, which vowed to go all-in on job creation, the latest figures show it needs to review its policies to find what may be going wrong.
More worrisome is that the nation cannot really expect its employment situation to change for the better because its economic prospects for the second half are not bright.
Jobs are directly related to economic conditions.
The Korea Development Institute said in a report on Sept. 6 that the national economy has not yet shown a sound recovery.
Corporate polarization has deteriorated, too. According to the Korea Chamber of Commerce and Industry, the combined operating profits of all listed companies for the second quarter increased 17.7 percent, but the number becomes a 24.2 percent decrease if top 10 groups are excluded.
A rapid hike in the minimum wage and expansion of the scope of ordinary wages in a court decision that will cause companies to pay back allowances retroactively have shrunk available employment capacity.
It is a serious problem that some companies decided to leave the country because they could not hold out in Korea.
Moon’s election pledge to convert all temporary outsourced workers to regular staff workers at public-sector entities that have outsourced jobs has made scarce employment opportunities for the youth even scarcer.
To make matters worse, North Korea’s ballistic missile launches and nuclear tests have escalated tensions on the Korean Peninsula, throwing a wet blanket on the economy.
China’s economic retaliation for the deployment of a US anti-missile system is suppressing Korean businesses.
The Moon administration has drawn up a policy to expand the hiring of civil servants and pubic enterprise employees as a solution to ease youth unemployment.
It was intended to act as a pump priming exercise to induce private sector employment by increasing demand. But instead it caused an estimated 700,000 young people to seek public sector jobs rather than work in the private sector. In effect, the policy encouraged youth unemployment.
Creating jobs using taxpayers’ money or pressuring public enterprises to hire more might look like an easy fix, but it is risky and likely to end in failure. Undoubtedly, the effect of such a policy cannot last long, and the fiscal burden will keep snowballing.
Standard ways to solve joblessness already exist.
Corporate competitiveness must be raised through labor reforms, deregulation, innovation and productivity enhancement. Then, jobs will be created by themselves.
An example of this is Japan, which has grown six quarters in a row with a youth unemployment rate of around 4 percent.
Nothing is more urgent to reinvigorate the economy than to support companies so that they can increase investment, production and employment.
The government must give incentives to companies looking for investment opportunities. Only that way can good jobs be created.
Selfish hard-line labor practices should be addressed to block them from dragging business down.
Deregulation for liberalization should be carried out. In this light, it is encouraging for the government to have announced recently that it would introduce negative list and regulatory sandbox systems.
This time, politicians should pass the service industry development bill which has gathered dust for years.
Economic policymakers must keep in mind that companies and jobs are two sides of the same coin.