ED Setback to growth policy

Government finds it hard to create more jobs

The February jobs report seems to have dealt a setback to the Moon Jae-in administration’s income-led growth initiative, showing that creating jobs is easier said than done.

The unemployment rate stood at 4.6 percent last month, down 0.3 of a percentage point from a year ago, thanks to rising employment in the construction and public services sectors. The jobless rate for young people ― those aged between 15 and 29 ― fell even more sharply to 9.8 percent from 12.3 percent over the cited period.

The number of newly added jobs plunged to 104,000 in February, compared with the previous month’s rise of 334,000. The monthly addition of new jobs marked the lowest gain since January 2010.

Creating more jobs was one of President Moon’s core campaign pledges. On Thursday, the government unveiled a set of measures to lower the youth jobless rate to the 8 percent level by 2021.

The measures call for extending direct financial and tax incentives to young jobseekers. As much as 9 million won ($8,400) will be directly given to every new regular worker at smaller firms every year. The sum is equivalent to a third of the annual salary of a full-time employee at a large firm. The financial support will be available for the next three years.

Unfortunately, the measures, which focus on allocating more of the government budget to job creation, are sure to trigger even more criticism about “pouring water into a bottomless jar.”

Critics direct their attack to Moon’s policy that raised the minimum wage by a big margin, saying deregulation and labor reform to create a more flexible job market are the only fundamental solutions. They cite the examples of the U.S. and Japanese governments that have succeeded in bringing back large businesses from overseas.

However, Koreans have seen that deregulation has had little to do with job creation in this era of jobless growth. Making the labor market less rigid will also widen the already severe income polarization.

At stake is how to use the precious budget most wisely and sustainably by focusing on areas such as public welfare, education and safety.