Unemployment Gloom
Time to Increase Support for Job Creation Programs
Workers are increasingly worried about their job security as the Korean economy is bearing the brunt of the global financial crisis. The government statistics on employment ostensibly shows no problem since the jobless rate remained unchanged at 3 percent last month from a year earlier. The figure looks much lower than any other economies around the world.
However, closely looking at the stark reality, South Korea is faced with the serious problem of a rapid loss of jobs in the aftermath of the worldwide credit tsunami and economic slowdown. According to the National Statistical Office (NSO), only 97,000 jobs were created in October, hitting the lowest monthly figure since February 2005. The number fell below the 200,000 mark in March. And it tumbled below the 100,000 mark seven months later.
It is disappointing that the Lee Myung-bak administration's target of creating 200,000 jobs has become a pipe dream. Critics accuse the Lee leadership of fueling economic woes by clinging to his campaign pledge to increase annual economic growth to 7 percent, jack up per capita national income to $40,000 and turn South Korea into the world's seventh largest economy.
By presenting too rosy a picture, the administration has been unable to grasp the real scope of the U.S. subprime mortgage crisis and its contagion effect on not only advanced economies but also developing countries. As Korean economic growth is feared to slow down to 3 percent next year, the government unveiled an additional 14-trillion-won stimulus package early this month to prop up economic growth at 4 percent and create 200,000 jobs.
The Lee government has so far this year announced a series of tax cuts and expanded budget spending which total 33 trillion won, or 3.7 percent of the nation's gross domestic product (GDP). However, these packages are not enough to usher in an economic turnaround. Against this backdrop, the state-run Korea Development Institute (KDI) predicted last week that the economy would grow by 3.3 percent in 2009 with job creation standing at around 100,000.
What really matters is that the Korean economy is losing its ability to create more jobs. Large local businesses are reluctant to offer more job opportunities, as they are not ready to increase their facility investment due to growing downside risks at home and abroad. On the other hand, more and more small and medium companies are being driven to the brink of bankruptcy. In this situation, the government's stimulus packages based on tax cuts and expansionary fiscal policy are not likely to create jobs.
Therefore, policymakers are advised to increase support for job creation programs in a bid to help the unemployed, especially college graduates and young people, to find jobs. We cannot think about a welfare society without jobs. The country has already suffered from ``growth without jobs'' over the past several years. In fact, officials, politicians and business leaders have only shouted empty slogans. Now, they should act to make joint efforts to offer more jobs in order to wisely ride out the financial turmoil and economic slump.