: Time to focus on deregulation to create jobs
South Korea saw nearly 220,000 jobs disappear last year, the largest loss since 1998 when the country was hit by the Asian financial crisis. The employment shock stemmed from the unprecedented COVID-19 pandemic.
According to Statistics Korea, the number of employed people stood at 24,904,000 in 2020, down 218,000 from the previous year. The number of unemployed people surged to 1.1 million, the largest since 2000, bringing the official unemployment rate to a 20-year high of 4 percent.
The gloomy figures show how difficult it has been to prevent mass job losses and offer more employment opportunities in the face of the devastating economic fallout from the coronavirus. It can be said that the setback was inevitable given the worldwide public health crisis; yet the question is whether the government and businesses did their best to minimize the fallout.
For starters, the Moon Jae-in administration has made efforts to keep people employed and avoid mass layoffs since the COVID-19 outbreak here last January. But the problem is that the liberal government has focused on increasing jobs in the public sector without encouraging the private sector to hire more people. Of course, the authorities have provided state support for businesses which maintain the employment of workers amid the crisis.
However, such efforts were insufficient to boost employment. Some critics have attacked the Moon administration for only increasing the number of public sector jobs by mobilizing taxpayers' money. They have argued that such a stopgap policy cannot help the country overcome the COVID-19 employment shock. As such, private businesses cannot shirk their responsibility for the shrinking job market. They should have played a more active role as the creator of jobs.
Against this backdrop, low-income earners have been most vulnerable to the coronavirus shock. According to the statistics office, 313,000 temporary workers and 101,000 day laborers lost jobs last year. By sector, workers in the services industry, including wholesale and retail, accommodation and eateries, suffered the most.
What's more worrisome is that the situation is expected to aggravate further, at least in January and February, in the aftermath of tightened social distancing rules and quarantine measures aimed at fighting the resurgent coronavirus.
As things stand now, the country cannot get out of its employment woes without taking more fundamental and comprehensive measures. Finance Minister Hong Nam-ki has promised to offer 830,000 public sector jobs in the first quarter of the year. He has also committed to providing more jobs for young people and women.
First, the government should expand the social security net to better protect the jobless. Then it must push for deregulation and create a better business and investment environment so that companies can hire more. As everyone knows, businesses, not governments, are the main actors in generating jobs. The Moon administration should also promote entrepreneurship and innovation to speed up an economic recovery which holds the key to increasing employment.