President to Prioritize Job Creation
By Na Jeong-ju, Lee Hyo-sik
Staff Reporters
President Lee Myung-bak said Thursday his administration will place top priority on creating jobs this year by offering tax incentives to smaller firms and opening more positions in the public sector.
In the long term, it will seek ways to transform Asia's fourth-largest economy into a services-oriented one and improve labor market efficiency in a bid to prevent unemployment from becoming a structural problem, he added.
Lee's remarks came at his first national employment strategy meeting where the government unveiled a set of policy measures aimed at creating more jobs. Through the measures, the government is aiming at generating at least 250,000 new positions this year, up from an initial target of 200,000.
"Korea has emerged as one of the fastest recovering economies in the world over the past year. But its employment market continues to remain in a slump, preventing low- and middle-income households here from enjoying the ongoing rebound. To improve the livelihood of working families and promote economic recovery, our top policy priority for 2010 is to create more jobs," Lee said.
In 2009, Korea sustained its largest loss of jobs since the 1997-98 Asian financial crisis, with many businesses downsizing workforce. The number of workers stood at 23.51 million last year, down 72,000 from 2008, the largest decrease since the nation saw 1.28 million positions disappear in 1998, according to Statistics Korea.
The number of jobless came to 834,000 in 2009, up 48,000 from 2008, with the jobless rate jumping from 3.3 to 3.5 percent. But in reality, some 3.3 million Koreans are "practically jobless," with many giving up looking for work, or studying and undergoing vocational training for employment amid the tight job market.
Under the measures, the government will provide small businesses with tax breaks and other incentives if they hire full-time employees through the first half of 2011, while expanding state job-hunting services and building a more extensive employment database.
As for mid- and long-term measures, it plans to turn the nation's increasingly technology- and capital-intensive economic structure into one that generates more jobs, advance the services industry, improve labor market efficiency and nurture a talented workforce.
The government will also provide larger research and development funds to "low-carbon, green growth" sectors, create a more business-friendly environment, nurture parts and material industries, and root out big businesses' unfair practices against small firms.
But it did not specify when these steps will be implemented, citing budgetary constraints and uncertainties over the passage of relevant bills at the National Assembly.
At the meeting, President Lee urged ministers to step up efforts to make Korea the first country among OECD members to stabilize its job market following the global meltdown in late 2008.
"The youth unemployment rate has reached an alarming level. The lack of jobs for early retirees is also a big challenge," Lee said in the meeting.
"We can improve the welfare of ordinary people by creating jobs. That's also crucial for economic development in the future. I want to hear that Korea has become the first OECD member to stabilize its job market."
President Lee noted that one of his biggest tasks this year is to ease social concerns about unemployment, saying cooperation from private firms was important in doing so.
He also said that this year's G20 summits, slated for Toronto in June and Seoul in November, will tackle the issue of the sluggish job markets around the world as a key agenda item.
"It is not the government, but enterprises that provide jobs. The government should only play its part to assist them," Lee said.
To cope with the projected labor shortage in the future as a result of the country's rapidly aging population and low birthrate, the government will make efforts to bring more foreign workers into the country.
It also plans to take a host of steps to bolster the competitiveness of leisure, tourism and other services industries to ease the tight labor market, while administering an array of effective vocational training programs tailored to specific occupations.
"We will make an effort to ease labor flexibility by introducing performance-based compensation and wage peak systems. Through these efforts, we expect the economy to generate an additional 50,000 jobs annually and raise the nation's employment rate to 60 percent in 10 years," Strategy and Finance Minister Yoon Jeung-hyun said.
"This year, the government will continue a range of taxpayer-funded projects to employ a total of 580,000 people in various public services areas." We will also construct a more extensive employment data network to better help employers and job seekers," he added.
The Korean economy has been recovering rapidly from the worldwide economic slump, but the growth momentum has been losing steam with the job market staying in the doldrums despite the economic recovery.