Moon urged to re-examine employment plan

By Kim Jae-kyoung

Global economists have called on President Moon Jae-in to re-examine his jobs creation policy because it could become a heavy social burden in the long term and undermine the nation’s economic growth potential.

They urged Moon and his policymakers to look closely into the efficiency and productivity of the public sector jobs they seek to create in order to avoid serious pitfalls.

Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis said Moon’s plan for youth unemployment is a “step backwards.”

“What Korea needs is to build a vibrant private sector that can innovate and create jobs no matter the consequences of robotization and AI on job creation not only in Korea but globally,” she told The Korea Times.

She pointed out public sector jobs should only be created if they are needed and productive enough for their cost.

“If not productive enough, it will only drag down Korea’s productivity and, thereby, potential growth,” she said.

“Furthermore, it will increase fiscal expenditures so higher taxes will need to be raised. The end consequence, based on Europe’s experience, is that young talent will leave Korea and only the less talented will remain for those public sector jobs.”

Moon has pledged to create 810,000 jobs over the next five years in the public sector, including 174,000 civil service positions in national security and public safety and 340,000 in social services.

He also seeks to convert 300,000 irregular public sector workers into permanent employees.

James Rooney, vice chairman of the Seoul Financial Forum and chairman of Advanced Capital Partners, echoed Garcia-Herrero, saying Moon’s plan is unlikely to produce the intended outcome.

“Although it is well-intentioned and presumably actionable, I do not count most of those actions as real job creation,” Rooney said.

“Instead, many of them simply increase the fixed cost of government and thereby increase the social burden without creating any new productive economic output.”

Economists, in particular, believe the Moon administration should come up with policies based on sophisticated analysis of the economic situation.

“Keynesian economists believe that pump-priming such as the creation of public sector jobs would kick-start the economy leading to more consumption and investment,” said Sohn Sung-won, professor of economics at California State University.

“I would like to think Keynesian stimulus should be used when the economy and the job market are very depressed. Clearly this was the case during the Great Depression. Is Korea at such a dire point?” he said.

Sohn also said another point that should be cleared is where the money will come from.

“One could argue that if the government spends money by borrowing or through taxes, it takes money away from the private sector, hurting private sector job growth,” he said.

“In short, it is not just job creation through pump priming _ its effects on deficits and private sector incentives should be considered as well.”

Against this backdrop, experts recommend the government make more efforts to encourage private firms to hire more young people by easing regulations, offering financial incentives and ensuring a flexible labor market instead of creating more jobs in the public sector.

Also, they urged the government to place more emphasis on skills creation and human resources development, including expanded vocational education and training for young jobseekers.

“If we create skilled human resources with the characteristics and capabilities needed for the future, there will naturally be jobs available for them and demand for those people from employers,” Rooney said.

“There needs to be a major effort to upgrade the skills, training and capabilities of Korea’s precious human capital to match the needs of a more advanced economy and a work environment where very different skills will be creating the real economic value.”

He pointed out the high number of unfilled jobs at present because employers cannot find workers with the necessary skills and experience.

“If we cannot supply those skills in Korea then employers will be forced to go overseas to other countries to find those workers,” he said.

“This means the value-added and economic contribution occurs in that other country and not here in Korea, even if the employer is originally a Korean company.”