The July employment data showed the Moon Jae-in administration has increasingly lost momentum in creating jobs. The liberal government has come under mounting criticism for failing to offer more jobs by adopting policies that are too idealistic.
According to Statistics Korea, the number of employed people reached 27.08 million last month, up a mere 5,000 from the same month last year. The slight increase was the lowest since January 2010 when the number fell by 10,000.
The gloomy performance came amid growing public frustration with President Moon's income-led growth policy, aimed at boosting economic growth by generating more jobs with higher income, particularly for poor workers.
People are complaining that they are facing fewer jobs and lower income despite President Moon's much-avowed promise to devote himself to job creation. The latest statistics have deepened the sense of crisis that his inclusive growth policy will go down the drain even though the government spent huge sums of money.
In fact, all economic players were shocked that only 5,000 new jobs were created in July, compared with 104,000 in February, 112,000 in March, 123,000 in April, 72,000 in May and 106,000 in June.
More worrisome is that the number of unemployed people has exceeded the 1 million mark for seven months in a row in July. It was the longest period since the number rose above 1 million for 10 consecutive months from June 1999. This means that the country is now suffering the worst jobless situation since the 1997-98 financial crisis which caused mass layoffs.
Many scholars and experts attributed the present problem to a sharp hike in the minimum wage. In the run-up to the May 2017 election, President Moon promised to increase the wage to 10,000 won ($8.8) per hour by 2020. And the government ramped up the wage 16.4 percent to 7,530 won this year. It also decided to raise it 10.9 percent to 8,350 won next year.
As the minimum wage climbed by a big margin, small businesses and the self-employed reduced their workforce in a desperate bid to cut down on soaring labor costs. The shortened 52-hour workweek, which took effect July 1, has added fuel to the fire.
Ironically, President Moon's income-led growth policy has helped reduce the number of new jobs, while increasing the number of the jobless. How can his government explain this phenomenon, despite the injection of supplementary budget of 3.9 trillion won ($3.4 billion) this year and 11 trillion won last year to generate more jobs?
First, the Moon administration should admit its policy failures. It should not try to justify the misguided policies by only repeating that such policies will produce their intended results later this year or early next year.
Now President Moon and his policymakers should work out a new policy and strategy to tackle the worsening job crisis and the continuing economic downturn. Otherwise, they may lose a rare chance to rectify their mistakes and take a new course for economic recovery.