ID :
51323
Thu, 03/19/2009 - 12:37
Auther :
Shortlink :
https://www.oananews.org//node/51323
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(News Focus) Doubt remains over effect of stimulus package
SEOUL, March 19 (Yonhap) -- The latest fiscal spending measure by the government to generate jobs could ease the deepening economic downturn by providing work opportunities for hundreds of thousands of job seekers and bolstering sagging domestic demand.
Concerns, however, are still lingering over whether it would be enough to turn
around the economy as worldwide recessions keep wreaking havoc on exports, a key
growth engine for Asia's fourth-largest economy, analysts said.
The government earlier announced that it will spend 4.9 trillion won (US$3.54
billion) to create 550,000 jobs this year. The money needed to finance the
initiative will come from an extra budget to be announced this month.
The measure calls for the government to expand financial aid to companies joining
the state-led "job sharing" program from the current 58.3 billion won to 365.3
billion won and to inject 99.2 billion won to provide up to 40 percent of the
salaries of workers on unpaid leave for 3 months.
The government said that it will spend 305.2 billion won to hire 25,000 teaching
assistant instructors at public schools and provide up to 70 percent of salaries
of interns hired by small businesses.
In order to help laid-off workers tide over the ongoing economic crisis, it plans
to expand unemployment payments and spend around two trillion won to offer
temporary jobs to people in the lowest income bracket.
The move is the latest in a series of the government's economic stimuli aimed at
creating jobs, bolstering domestic demand and averting what would be the first
recession in more than a decade.
"It seems to be timely and appropriate," said Lee Sung-kwon, an economist at
Goodmorning Shinhan Securities. "The government has to do whatever it takes to
stabilize the labor market and send a strong signal that it is doing so. This is
part of it."
Conditions in the labor market have been deteriorating in recent months as
companies scale back recruitment amid growing uncertainty over when demand will
rebound.
On Wednesday, the National Statistical Office reported that the country's jobless
rate jumped to a four-year high of 3.9 percent in February with a total of
142,000 jobs eliminated from payrolls compared with a year earlier. The job loss
is the steepest since September 2003, when 189,000 jobs disappeared.
The labor market outlook remains bleak as the economy is cooling at a fast pace,
hit by declining demand for Korean goods and the reluctance of companies to
invest.
Exports plunged 17.1 percent in February from a year earlier, after posting a
33.8 percent decline in the previous month. Facility investment is also expected
to shrink at a faster pace this year, with many think tanks forecasting a
double-digit contraction.
The government is seeking to draw cooperation from the corporate sector in order
to bolster hiring and investment as it expects the economy to shrink 2 percent
this year and shed around 200,000 jobs compared with a year earlier.
Last month, Finance Minster Yoon Jeung-hyun met business leaders and urged them
to step up employment and investment as part of efforts to reinvigorate the
slipping economy.
Observers say that the government efforts could help slow the pace of the
economic downturn in the second half, when the nation's additional budget and
other stimulus efforts will likely show their impact.
"There are some signs of a rebound in economic activities, though very small,
compared with the fourth quarter when people reacted excessively to shocks coming
from outside," said Jeon Min-kyu, an analyst at Korea Investment & Securities.
"The government's latest move might be criticized as a stop-gap measure as it is
mainly focused on short-term employment but I think it is the best option that it
could take at this moment," he said.
Jeon, however added that the overall labor market and economic conditions might
not turn around in full-swing until external factors are improving.
"The problem is external economic conditions. The government will have its hands
tied while external factors continue to rock the economy," he said.
The International Monetary Fund earlier said that the global economy will
contract 0.6 percent this year, reversing its previous projection of a 0.5
percent growth. The World Bank also expected minus growth for this year and the
sharpest decline in global trade in 80 years.
Concerns, however, are still lingering over whether it would be enough to turn
around the economy as worldwide recessions keep wreaking havoc on exports, a key
growth engine for Asia's fourth-largest economy, analysts said.
The government earlier announced that it will spend 4.9 trillion won (US$3.54
billion) to create 550,000 jobs this year. The money needed to finance the
initiative will come from an extra budget to be announced this month.
The measure calls for the government to expand financial aid to companies joining
the state-led "job sharing" program from the current 58.3 billion won to 365.3
billion won and to inject 99.2 billion won to provide up to 40 percent of the
salaries of workers on unpaid leave for 3 months.
The government said that it will spend 305.2 billion won to hire 25,000 teaching
assistant instructors at public schools and provide up to 70 percent of salaries
of interns hired by small businesses.
In order to help laid-off workers tide over the ongoing economic crisis, it plans
to expand unemployment payments and spend around two trillion won to offer
temporary jobs to people in the lowest income bracket.
The move is the latest in a series of the government's economic stimuli aimed at
creating jobs, bolstering domestic demand and averting what would be the first
recession in more than a decade.
"It seems to be timely and appropriate," said Lee Sung-kwon, an economist at
Goodmorning Shinhan Securities. "The government has to do whatever it takes to
stabilize the labor market and send a strong signal that it is doing so. This is
part of it."
Conditions in the labor market have been deteriorating in recent months as
companies scale back recruitment amid growing uncertainty over when demand will
rebound.
On Wednesday, the National Statistical Office reported that the country's jobless
rate jumped to a four-year high of 3.9 percent in February with a total of
142,000 jobs eliminated from payrolls compared with a year earlier. The job loss
is the steepest since September 2003, when 189,000 jobs disappeared.
The labor market outlook remains bleak as the economy is cooling at a fast pace,
hit by declining demand for Korean goods and the reluctance of companies to
invest.
Exports plunged 17.1 percent in February from a year earlier, after posting a
33.8 percent decline in the previous month. Facility investment is also expected
to shrink at a faster pace this year, with many think tanks forecasting a
double-digit contraction.
The government is seeking to draw cooperation from the corporate sector in order
to bolster hiring and investment as it expects the economy to shrink 2 percent
this year and shed around 200,000 jobs compared with a year earlier.
Last month, Finance Minster Yoon Jeung-hyun met business leaders and urged them
to step up employment and investment as part of efforts to reinvigorate the
slipping economy.
Observers say that the government efforts could help slow the pace of the
economic downturn in the second half, when the nation's additional budget and
other stimulus efforts will likely show their impact.
"There are some signs of a rebound in economic activities, though very small,
compared with the fourth quarter when people reacted excessively to shocks coming
from outside," said Jeon Min-kyu, an analyst at Korea Investment & Securities.
"The government's latest move might be criticized as a stop-gap measure as it is
mainly focused on short-term employment but I think it is the best option that it
could take at this moment," he said.
Jeon, however added that the overall labor market and economic conditions might
not turn around in full-swing until external factors are improving.
"The problem is external economic conditions. The government will have its hands
tied while external factors continue to rock the economy," he said.
The International Monetary Fund earlier said that the global economy will
contract 0.6 percent this year, reversing its previous projection of a 0.5
percent growth. The World Bank also expected minus growth for this year and the
sharpest decline in global trade in 80 years.
