By Jeffrey Jones
The world economy still suffers from too much government and household debt preventing spending by governments and individuals resulting in no or low growth. Unfortunately, this condition will be with us for some time to come until the debt can be significantly reduced to provide governments and consumers with the confidence to be able to spend again.
This effort to reduce debt, however, suffers from a common problem felt around the globe: high unemployment or insecurity regarding future employment. In particular, youth unemployment is a serious problem affecting almost all nations.From Korea’s vantage point, this is the most urgent issue that should be resolved now rather than later.
Youth unemployment is increasingly affecting the stability of nations and governments. Youth unemployment was one of the root causes of the Arab Spring which brought about the ousting of Tunisia’s President and Prime Minister, the ousting of Egypt’s Mubarak and the death of long time tyrant Gadaffi of Libya. Entire cabinets have had to resign or be fired in Oman, Jordan Sudan, Yemen, Kuwait and Syria and significant economic concessions were made in Saudi Arabia, Bahrain, Lebanon and Algeria. The UK suffered violent demonstrations and the U.S. is still being traumatized by demonstrations from New York to San Francisco under a rubric associated with a military siege; occupy Wall Street, Washington, Oakland and so on.
Korea suffers from extremely high youth unemployment. Dependable figures are difficult to come by, but credible estimates have youth unemployment as high as 20 percent. Under employment figures would be even higher and if job satisfaction is an important gauge of social stability, the numbers are even worse. This is affecting the outcomes of elections and changing the way young people think about education and other important social values.
Youth unemployment has resulted from a variety of factors afflicting the economy to include low growth, but increased productivity is an important factor. Manufacturing, the traditional employer in Korea, has become so highly productive and mechanized that it is difficult to find people on the floor of factories.The recent announcement of a large 2 trillion won investment by Samsung in a research facility in Songdo is another example of the problem. This large investment will only result in an addition of 400 jobs to the economy.
Korea has a unique opportunity to alter the course of youth unemployment because of the historically low levels of investment in tourism facilities and the need now facing the country for significant increases in the number of facilities to meet the growing needs of Chinese tourism. The Chinese economy continues to grow creating the largest group of wealthy and middle class populations in the world who want to travel. Korea is a natural destination for large numbers of Chinese because of proximity and comfort for the Chinese traveler. Yet, Korea lacks the facilities necessary to house and feed Chinese tourists. By good fortune, investment in the tourism industry results in high employment opportunities wanted by today’s young people and the industry is not susceptible to mechanization.
Singapore woke up to this reality very early and last year opened two integrated resorts to attract large number of tourists. The Genting Group of Malaysia and Las Vegas Sands of the United States each invested approximately $4 billion to $6 billion, respectively in the resorts and each of them directly employ approximately 13,000 employees each.
Compare this investment to the $2 billion to be invested by Samsung resulting in 400 jobs, while an investment only double the size of Samsung’s results in 13,000 well paying jobs, 30 times the number of jobs created by Samsung’s investment.
Several operators of integrated resorts, including those who have already invested in Singapore have indicated their willingness to invest in integrated resorts in Korea. For the sake of our young people and the stability of Korea, it is time for the Korean government to take action and follow the Singapore model of opening the country to integrated resorts.
Integrated resorts will result in 20 million tourists annually coming to Korea which will be a boom to small business owners across the country to include the farmers, taxi drivers, restaurants, clothing stores and other businesses frequented by tourists. More importantly, integrated resorts will solve our youth unemployment problem resulting in a stronger economy and hope for the future for our young people. What are we waiting for?