[Editorial] “Agreement to Create Jobs Should Not Discourage Companies”

Representatives of labor, management and Government reached an agreement on a “social pact for creating jobs.” It would be wrong, however, or a varnishing of reality, if we expect the agreement will bring an immediate increase of jobs.

The pact clearly states that business companies should refrain from layoffs to the fullest. If they control layoffs, existing employees may benefit from more stable labor conditions on a short-term basis, whereas business competitiveness can be weakened and the creation of new jobs for youth will be inactive. It is a paradox in job market that forbidding layoffs creates more joblessness. Companies should make flexible measures on either layoffs or recruitment so that they can cope well with the changing business environment and decreasing foreign investment in the nation.

If labor unions deny any reasonable layoffs by advocating the agreement, the relationship between labor and the management will worsen, and the efficient manpower operation that the agreement seeks may turn out to be nothing. Six years ago during the financial crisis, even though a general agreement focusing on smooth layoffs had been made by three parties, labor, management and government, this agreement eventually became void due to the opposition from radical labor unions and the government who jumped on them. Foreign investment had shrunk then, and the number of jobs had declined as a result, which we should pay attention to at this moment.

In the pact, each item appears to be fine. Yet some articles have difficultly in expecting realistic effects that result from inconsistent objects. The government plans to give a variety of tax and financial advantages to companies and employees to create jobs, and even increase public employment. However, if the government ignores financial limits and only seeks short-term effects, it will raise a side effect with no steady increase in employment after all. That is why this pact is suspected as a lure for the upcoming general election. In addition, the agreement stated that business companies should root out illegal financial offers to politicians, but this requires far more than the effort only by the companies.

The agreement should not only appear to remain in good shape by the three parties. The government will have to fulfill its policy to effectively improve investment conditions, and the labor unions, including the Korean Federation of Trade Unions, who didn’t participate in the agreement, should express their intention to wake up the nation’s economy by giving up demands for pay raises. These will be the priorities that create jobs.