Six out of 10 major companies in South Korea will not hire new employees or have not set a recruitment plan for the first half of this year. The number of young employees newly hired by public institutions last year went down 20.5 percent compared to the previous year and it won’t be much better this year either. Spring seems still far away for young jobseekers experiencing a brutal job market as a result of the COVID-19 pandemic since last year.
According to the survey of top 500 companies based on their sales by the Korea Economic Research Institute (KERI), 17.3 percent answered they will not hire any new employee for the first half of this year while 46.3 percent answered they have not made a recruitment plan. Among those which will not hire any new employee or recruit less than they did last year, 51.1 percent cited domestic and global economic slump as a reason while 12.8 percent and 8.5 percent pointed to employment rigidity and the increased burden of labor costs, respectively.
While an economic slump is an external factor, employment rigidity and increased labor costs are the direct results of the current administration’s pro-labor policies and income-led growth policies. South Korea’s labor flexibility, which is already among the lowest of OECD member countries, will worsen with the passage of three new laws on labor unions. The share of workers who earned less than the minimum wage last year was 15.6 percent overall and 36.3 percent for businesses with less than five employees. While part of the blame is on malicious business owners, the figures show that there are many business owners and the self-employed who cannot take the burden of the minimum wage, which went up 32.8 percent over the last three years.
Decreased recruitment by public institutions was expected when President Moon Jae-in ordered no non-regular workers in the public sector. Public institutions whose organizations have become bigger due to the increase of regular workers are hesitant to hire new employees. Part of the reason why major companies, except for Samsung and SK Group, got rid of open recruitment for college graduates is that they wanted to avoid exposing the size of new recruitments under the government’s close attention to businesses with tight regulations although the superficial reason was that hiring based on demand is more effective.
The government put forward a plan to create over 1.04 million jobs for young people by adding 1.5 trillion won from the revised supplementary budget and spending a total of 5.9 trillion won. While the plan may help improve employment statistics, it will only create short-term part-time jobs for pocket money, which are far from the jobs wanted by young people. In order to improve the labor market, it is crucial to create conditions that allow businesses in the private sector to engage in active recruitment activities. Above all, the government should listen to the voices of businesses under a bigger employment burden due to the three laws on labor union, etc. calling for complementary legislation.