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Time to change course

Dec 13,2018
In Tuesday’s cabinet meeting, President Moon Jae-in admitted that our economy is having trouble with employment and improving the livelihoods of the people. In a visit to the Ministry of Employment and Labor after the meeting, he accepted the widespread perception that the government’s employment policy has failed.

Alarm bells were ringing. New hires in February only increased by 100,400 — a third of the monthly average last year — primarily due to the government’s drastic minimum wage hike — a whopping 16.4 percent last year — under the slogan of “income-led growth” for the poor. Even when 145,000 jobs disappeared in wholesale, retail, lodging and restaurant businesses, the government brushed it off, saying it was just temporary pain.

An employment crisis has continued since February. The income-led growth policy backfired: the weak lost their jobs and distribution of wealth worsened. Nonetheless, the government claimed a 90 percent positive effect from the minimum wage increase by twisting the available data. Even when jobs only grew by 5,000 in July and 3,000 in August, the Blue House attributed the dismal state of affairs to “transitional pain.”

Our job crisis was reconfirmed by the latest data from Statistics Korea. Jobs increased by 160,4000 in November compared to the same period of last year. At a glance, our employment situation seems to have improved. But the reality is different. Most of the increases were made in the public administration and welfare service areas, and most of them are temporary part-time jobs. Side effects from the rapid hike in the minimum wage are serious. 219,000 jobs vanished in the wholesale, retail, restaurant and lodging areas, not to mention a shocking decrease in new hires by 91,000 in the manufacturing sector last month.

We welcome Moon’s admission, albeit belated, of the job crisis he has created. It is time for the administration to change its policy direction.

It must start with moderating the pace of minimum wage hikes and easing up on the implementation of the 52-hour workweek. Another 10.9 percent increase in the minimum wage next year will spell disaster for small- and mid-sized companies. The Korea Federation of Employers estimates that the minimum wage would actually increase by more than 20 percent when taking into account the way the government calculates it. Small enterprises will have no other choice but to shut down. The government must boost flexibility in the labor market and lift regulations.

JoongAng Ilbo, Dec. 13, Page 34