[Editorial] Unattainable Job Creation

Yesterday the government laid out the ‘2007 Economic Policy Direction’ and its goal to achieve 4.5% economic growth and create 300,000 jobs. This goal, however, seems to be unattainable. Last year, the government provided less than 300,000 jobs, falling short of its 400,000 goal. There is nothing to say about President Roh’s pledge during the presidential election of creating 2.5 million jobs within his 5-year term.

“With lackluster growth in the economic activity participation rate, creating 300,000 or more new jobs a year would be difficult,” assessed the Korean Development Institute (KDI). The Samsung Economic Research Institute predicted that only 270,000 new jobs would be generated this year. In this paper’s view, the government’s goal to create 300,000 jobs appears to be filled with ‘social jobs’ in the run-up to the presidential election.

‘Social jobs’ mean providing social services such as education, health care, childcare, and cleaning. Usually, taxpayer’s money is used for paying wages of those in this field. The government admitted that these jobs are temporary, short term, and low wage ones that can disappear whenever the government stops paying subsidies. However, the Roh administration is gearing up to create 200,000 new social jobs with 1.3 trillion won in taxes this year, doubling subsidies every year. The Ministry of Labor announced that ‘social companies’ that provide social services would receive tax breaks and monthly labor cost subsidies of 770,000 won per person from this July. This shows how irresponsible the government is in managing taxpayer’s money and setting priorities.

The very solution for job creation emphasized by the KDI or private economic institutes is deregulation. Bank of Korea Chairman Lee Sung-tae also asked to stimulate people’s investment sentiment through clearing unnecessary regulations and nurture the service industry through market opening and competition. The administration’s focus on creating imperfect new jobs with government fund, which is currently not enough to run the country, heralds another policy failure.

Basically, jobs must be generated by private companies and their investment. However, companies are reluctant to invest due to excessive regulation. Meanwhile, the Blue House blames companies for not investing and piling up cash. With regard to expanding factories in the metropolitan area, related ministries said they would partly allow the construction, but President Roh put a blanket ban on the plan. Companies cannot but be frustrated at the high wall of regulation.

After the National Assembly cut the budget for creating social jobs, Cheong Wa Dae said 9,000 jobs would be inevitably lost, blaming that the opposition party is hampering job creation. When would the government put an end to its wrong policy of hampering private company’s investment and making them unable to create jobs? The government should take lessons from Geoje Island in South Gyeongsang Province that succeeded in increasing its per capita income to almost 30,000 dollar by vitalizing private companies and letting them generate more jobs.