09.18 Tue

Opinion

It’s about the jobs

Sept 04,2018
Kwon Soon-won
The author is a professor of business administration at Sookmyung Women’s University.

A series of breathtaking crises is taking place one after another. Public disgruntlement over the minimum wage shows no signs of abating. Owners of small businesses are rallying against the suffocatingly high figure. Conglomerates are having trouble adjusting to a shorter workweek mandated by the government. They are struggling to rearrange shifts for their salespeople and drivers, and trying to recalibrate hours with contractors.

The situation in the labor market is also worrisome. During the fourth quarter of last year, 265,000 people were hired, but that went down to 183,000 in the first quarter of this year. During the second quarter, it dropped to 101,000. In July, only 5,000 new jobs were added. The job market is not likely to improve by the end of this year.

The wealth gap, too, is growing wider. According to the latest data from Statistics Korea, the average monthly income of households in the bottom 20 percent shrank by 7.6 percent in the second quarter compared to the same period last year. It is the second-largest fall after the 8 percent seen in the first quarter.

In contrast, the average monthly income of the top 20 percent went up by 10.3 percent over the past year. The disposable income of the top 20 percent was 5.23 times higher than that of the bottom twenty. Because only 12 percent of wage earners are working for large companies with more than 300 employees, the wealth gap only widens.

Other uncertainties are also lingering. The United States is seeking to increase the federal funds rate based on its economic recovery and improved competitiveness, but the Bank of Korea has no plan to do so, fearing the possibility of worsening consumer sentiment and an economic slump. The slow job market is even affecting monetary policy.

Other economic factors like the U.S.-China trade war and Turkish financial crisis may also turn into storms. Because sentiment is an important factor in economic activity, any uncertainty will likely discourage investment and encourage conservative employment strategies.
The Moon Jae-in administration’s economic scorecard for its first year is extremely poor despite its grand pledge to create jobs and address the wealth gap. The president’s approval rating has plummeted from the 70 percent level to 53 percent. The government must pay attention to the whole market and reconsider its economic, job, fiscal and monetary policies comprehensively. It must fix what is broken and replace malfunctioning components. That is why expectations are high for Moon’s latest cabinet reshuffle.

The sense of crisis in the government seems similar to the unease of the people. It is fortunate that Moon’s replacement for labor minister will likely put more emphasis on employment. Lee Jae-kap needs to pass a confirmation hearing, but he is no doubt an expert in employment policy. In his first media interview after being nominated, Lee said his top priority would be creating jobs. He said that although creating a society that respects labor and has a strong social safety net is an important task, the top priority is employment.

In Moon’s second cabinet, the tasks of creating a society that respects workers and strengthening the social safety net must be handed over to the Economic, Social and Labor Council. The Ministry of Employment and Labor must focus on its strategic role of creating jobs and protecting labor standards.

It is understandable that Lee promised to visit the Korean Confederation of Trade Unions first if he is confirmed, but it would be more effective for the council to focus on adjusting relations with the labor community, taking into account the time and resources to build mutual trust between the government and workers. Since Lee is an expert of employment and Economic, Social and Labor Council Chairman Moon Sung-hyun is a veteran in labor-business relations, it is better for them to each use their expertise to produce successful outcomes.

In order for this “two-track” strategy to function effectively, the two major umbrella unions need to act responsibly. When an umbrella union uses social dialogue as a venue for negotiations toward its own interests, it is impossible to find a fundamental resolution to major economic and social problems.

And for the council to play a crucial role that realizes a society which respects labor, unions and employers must put aside their short-term interests and find a strategy of alliance and unity.

In negotiations within a company, a strike is often used as leverage to maximize the interests of union members, but mutual trust, exchange of information and continuous dialogue among unions, employers and other parties are critical to grow the pie. They must remember that insisting on their own interests will always cause a breakdown in dialogue.

Translation by the Korea JoongAng Daily staff.

JoongAng Ilbo, Sept. 3, Page 29
All News