In a speech Sunday, President Moon Jae-in emphasized that maintaining employment is the key to overcoming the economic impact from the novel coronavirus outbreak. He said the government would prioritize providing support to companies that try to keep jobs through labor-management agreements.
As he noted, the focus of coping with the fallout from the coronavirus crisis should be placed on preventing massive unemployment.
However, it should be pointed out that the Moon government’s efforts to prop up employment seem inadequate and irrelevant.
Recent data show the country’s employment situation is worsening rapidly, amid a steep economic downturn.
According to figures released by Statistics Korea last week, the nation lost about 195,000 jobs in March, marking the first on-year loss since 2009.
The number of hired people who took temporary leave surged by 1.23 million to 1.6 million last month, recording the sharpest rise since 1983, when the statistics agency began compiling related data.
Separate data from the Employment and Labor Ministry showed that the country’s unemployment benefit payments hit a record high of 898.2 billion won ($732.1 million) in March, up 40.4 percent from a year earlier. The number of recipients stood at 608,000, up 20 percent from the same month last year.
Experts note that even if the COVID-19 pandemic dies down in the coming months, it’s possible that its full impact on the job market has yet to be felt -- but it will probably hit in the second half of the year.
A prolonged coronavirus crisis around the globe is feared to cause South Korea’s export-focused economy to shrink at a steeper pace, exacerbating its unemployment problem.
South Korea’s exports, which fell 0.2 percent in March from a year earlier, tumbled 27 percent on-year in the first 20 days of April, according to customs data.
The International Monetary Fund last week forecast that the country’s economy would shrink 1.2 percent this year, as the COVID-19 pandemic disrupts global business and reduces consumer demand. It would mark the first on-year contraction of Asia’s fourth-largest economy since 1998, when it was hit by the Asian foreign exchange crisis.
Many private economic research institutes predict the country’s economic growth rate will fall more sharply.
The only substantial measure taken by the Moon government to cope with worsening unemployment is an increase in funds for helping companies maintain jobs to 500 billion won from 100 billion won.
The increased amount is still too small to meet requests from employers.
So far this year, more than 50,000 workplaces in the country have applied for employment retention subsidies, compared with 1,514 applications for the whole of last year.
The Moon government plans to provide up to 1 million won in emergency relief money to about 14 million households comprising the bottom 70 percent income bracket. The planned rescue program is estimated to cost 9.7 trillion won.
The ruling Democratic Party of Korea is pressuring the administration to expand the scope of recipients to all 20 million households.
The indiscriminate distribution of relief money needs to be reconsidered to preserve fiscal room in the event of massive joblessness down the road.
Companies certainly should do their utmost to retain jobs. But they should not be forced to keep employees regardless of their managerial conditions.
If companies fail, all their employees lose their jobs.
Unionized workers at some large firms have recently called for complete job security in return for a wage freeze.
But labor unions should be ready to make more concessions to enable their firms to overcome difficulties caused by the current crisis. They need to agree to freeze the minimum wage and expand the flexible working hours system.
Meanwhile, the government should go beyond calling for labor-management cooperation and lift regulatory restrictions on companies to help them hire more workers, enhance competitiveness and enter new business areas.
With the ruling party securing a dominant majority in last week’s parliamentary election, President Moon will be in a better position to push through regulatory and labor reforms needed to put the economy back on the path to growth after the pandemic crisis ends.
He should be determined to do harder work than saying labor-management cooperation is needed to receive more support from the government.