Labor Minister Lee Jae-kap said Tuesday there was no need for excessive pessimism about the economy as the economy and hiring conditions will improve in the second half of this year.

During a meeting on employment policy in central Seoul, Lee mentioned the 6.7 trillion-won revised supplementary budget that the government submitted to the National Assembly, and said he believes increased fiscal spending, recovery of exports and investment in plant and equipment would help improve the economy and increase jobs. 

On the 0.3 percent contraction of the country’s economy in the first quarter, Lee said: “It appears that sluggish exports and the time gap between the government spending (decision) and its execution have had a negative effect on the economy.”

“Considering the temporary factor, which is the time gap in government spending, I think there is no need to be overly pessimistic about the state of our economy,” he said.

On jobs, Lee said the number of employed rose by over 200,000 on year for two consecutive months starting February and that the employment rate had taken an upturn.

“Youth employment also improved, and the recent improvement in employment figures appears to be due to increased jobs in the public and service sectors, and the youth employment policy,” he said.

The minister also noted that the proportion of workers who earn less than two-thirds of the median income also dropped below 20 percent for the first time since the survey began in 2008.

Korea, which used to be among the OECD countries with the highest share of low-income earners, is now expected to rank in the mid-range, but its proportion of workers who are on low pay is still higher than the OECD average of 15.6 percent, Lee said.

“The situation of employed people is said to have improved, but things are difficult for those still looking for jobs,” Lee said.

“A continued decline in hiring in the manufacturing sector, including the country’s main industries, has led to a prolonged slump in hiring of people in their 30s and 40s.”

The minister noted that while the government has continued to widen its social safety net, it is still insufficient.

He said the ministry will soon announce plans to provide job seekers earning less than half of the median income with 500,000 won per month for six months.

The government will take steps to revise the law to include artists and workers who are not covered by employment insurance such as couriers and insurance salespeople as beneficiaries of the new support program which will be introduced next year, the minister added.

By Kim So-hyun (sophie@heraldcorp.com)