(EDITORIAL from the Korea Herald on Jan. 4)

Jobs, more jobs

If forecasts by the government and economic think tanks are correct, the nation's
output will grow more than 4 percent this year. The administration, which has set
its goal at 5 percent, says with confidence that this is attainable.

If so, the keyword in the 2010 national agenda should be "employment," rather
than "recovery." The rationale is simple: More jobs will disappear than those
that will be created, creating a net loss, if no action is taken in this regard.
Growth does not create as many jobs as it used to. An automated factory needs
only a fraction of the number of workers that were needed to man outdated
assembly lines for the same amount of output.
Jobless recovery is evidenced by the latest statistics. Gross domestic product in
2009 remained at the level of the previous year. But the job losses in the
private sector numbered as many as 320,000. The government had to spend huge sums
of money to make up for the losses in the public sector, creating mostly
temporary, not-so-decent jobs.
As it is required to reduce the fiscal deficit in an exit strategy this year, the
government cannot afford to spend as much money as it did when it provided
330,000 jobs in the public sector last year. Ultimately, it is the private sector
that creates jobs.
But this does not mean that the government can afford to stand idly by. Instead,
it may still create a substantial number of durable jobs if it decides to
reinforce its porous social security system.
Last month, President Lee Myung-bak promised to give top priority in policy to
improving the quality of life for people in the middle- and lower-income brackets
this year. These remarks are scarcely different from a commitment to improving
the social security net for those people.
One area of particular concern is nursing care, which is on the rise as a growing
number of patients are set to be covered by the insurance for long-term treatment
in the years ahead. The Ministry of Health, Welfare and Family Affairs says an
additional 50,000 jobs are needed to provide for greater nursing care this year.
The ministry's program should be assured of adequate funding, all the more so
because it will create additional jobs during these times of low employment as
well as provide greater social security for the needy.
But it is corporate investment that has to lead job creation. As aforementioned,
corporate investment, particularly in the manufacturing sector, does not employ
as many people as it used to. Paradoxically, that may be the very reason why
corporations should be nudged to make much more investments. If corporations
establish a much greater number of worksites, albeit with fewer employees at each
of them than before, they can possibly add up to a greater total of employees.
When an economy starts recovering, corporations tend to reduce the existing stock
first. They start to increase output when the stock goes down below the optimal
level. When the existing capacity cannot meet a growing demand, then a new
investment is made, resulting in an increase in the payroll. This whole process
explains why employment lags behind recovery.
In an early stage of recovery, it is only natural for corporations to defer
investments. This is evidenced by an increase in corporate deposits in one-year
or longer-term savings accounts - 103.76 trillion won at the end of third quarter
last year, up 31.5 percent from a year before. Even so, corporations will start
to spend on new facilities and equipment as soon as they are given the right
incentives, including tax credits, easier access to financing and deregulation.
But the administration is moving to phase out "temporary tax credits for
investments," mistakenly claiming they have not had much impact on boosting
corporate spending. It is ignoring the voice of opposition from large
corporations, who say the tax credits have been so long lasting that they have
almost become fixtures.
Their phased removal, if carried out, would certainly put a dent in corporate
investment. The administration will do well to keep them intact if they really
mean to boost employment.
In promoting employment, the administration is well-advised to pay keen attention
to the plight of those in the 25-to-39 age group, who have borne the full brunt
of the global financial crisis. During the first 11 months last year, those
employed in that age group averaged at 8,436,000, down 248,000 from the previous
year. The figure would have dropped further had it not been for internships and
other job programs set up by the government.
In particular, the administration will have to do all it can to relieve the pain
of high school and college students freshly out of school. Noteworthy in this
regard is the Ministry of Labor's plan to mediate the employment of those
graduating from vocational high schools and colleges. The ministry says that
beginning this year, information on 800,000 such graduates and 600,000
high-quality small- and medium-sized companies will be mutually available. The
ministry also plans to employ those with the experience of managing corporate
personnel and labor affairs as employment consultants and assign them to 150
universities.
Another worthy attempt by the administration is a plan to hold a "national
conference on employment strategies," a monthly meeting to be presided over by
the president. Just as the late President Park Chung-hee tried to boost exports
through his monthly trade promotion conference, so could Lee make use of his own
in striving to promote employment. Presidential pep talks and citations often
bring about better results than anticipated.
sam@yna.co.kr
(END)