hankyoreh

By Noh Hyun-woong, staff reporter

Back when Park Geun-hye was running for president in 2012, achieving 70% employment was one of her key election pledges. After she was elected, job creation became the central theme of her administration’s macroeconomic policy during its first year.

Park’s job creation efforts began in June 2013 with the announcement of a “road map” to 70% employment. The plan was to achieve the rate through job sharing, using increased employment to shore up a flagging potential growth rate. It followed this up with a program of “decent hourly employment,” an idea that involved raising the employment rate by encouraging women and older people to work with new high-quality jobs with flexible hours. The administration’s plan was to allay concerns that this would lead to a proliferation of irregular positions by starting the decent hourly employment program in the public sector before expanding into the private sector with job sharing.

There are reasons for focusing so much of its energies on raising the employment rate. Job creation offered the easiest way of addressing some of the most pressing economic concerns by promoting business and expanding domestic demand. During a New Year’s address on Jan. 2, Deputy Prime Minister and Minister of Strategy and Finance Hyun Oh-seok said, “We need to be working hard at job creation and stability in working class livelihoods so that the warmth of the economic recovery reaches all South Koreans.”

Hyun went on to say that sustainable growth was “only achievable when we are truly encouraging the creative economy to keep generating jobs, and the country’s economic growth is translating into happiness for each and every one of its people.”

The stance was reaffirmed last Jan. 6 in President Park’s announcement of a so-called “4-7-4 vision” of a 4% potential growth rate, 70% employment, and a per capita income of US$40,000.

A senior official at the Ministry of Strategy and Finance commented that the growth rate and per capita income goals were only reachable by achieving 70% employment.

“The task we face now is to beef up employment by achieving a creative economy,” the source said on condition of anonymity.

But many remain skeptical about the administration’s employment policy, worried that too much energy will be channeled into meeting quantitative targets without any concrete plan of action. Examples of this are the dispatch and substitute employment systems, which are permitted to limited extents.

“When you’re creating lots of poor-quality jobs, the effect is to eat away the good jobs that young people might try to get,” said Choi Hee-gap, an economic professor at Ajou University.

“The deregulation-centered job creation plan that is being executed now could have the opposite effect - creating bad jobs,” Choi said.

Persistently low growth poses another obstacle in achieving the Park administration’s goals. According to the Korea Economic Research Institute, 1% growth of the South Korean economy produced around 72,000 new jobs. Achieving 70% employment would require a consistent growth rate of around 5% for at least one year. But the government and economic institutes are projecting the economic growth rate to be just 3.5-3.9% for this year and around 4.0% for next.

The Ministry of Strategy and Finance has reported signs of “positive employment trends,” including the number of employed. The total number of employed people in November and December 2013 was more than 500,000 higher than the previous year - numbers last achieved in 2004.

The ministry said it would “focus its energies on the 70% employment road map going ahead, with an emphasis on youth and women’s employment.”

Indeed, figures on December 2013 and annual employment trends released on Jan. 15 by Statistics Korea showed people aged 15 to 29 facing severe employment woes last year. In 2013, the number of people with jobs in that age group dropped by 50,000 from 2012, and the overall youth employment rate stood at 39.7% - putting it below 40% for the first time since statistics were first reported in 1982. Youth unemployment was worse in 2013 than during the foreign exchange crisis of the late 1990s.

Meanwhile, the youth unemployment rate rose above 8% for the first time since 2010, when the effects of the 2008-09 global financial crisis were affecting employment. The numbers send troubling signals for the Park administration’s attempt to achieve 70% employment.

The overall rise in employment has also fallen short of policy targets. According to Statistics Korea, the 2013 employment rate for people aged 15 to 64 was 64.4%, which was 0.2 percent higher than in 2012. But the Park administration set a target of 64.6% back when it announced its road map in June 2013. Despite adding a large supplementary budget and coming out with a number of specialized job creation policies - including the “decent hourly employment” plan - it failed to meet the target in its first year in office.

The road map set targets of 65.6% employment in 2014, 66.9% in 2015, and 68.4% in 2016 before achieving 70.0% in 2017, Park’s last full year in office. Last year, a total of 386,000 people were added to South Korea’s overall job rolls. Most of them - some 254,000 - were people aged 50 or older, suggesting they are the ones currently shoring up the country‘s employment rate.

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