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Lotte, Hanwha, SK’s youth employment suspected as ‘reward’ to government

Lotte, Hanwha, SK’s youth employment suspected as ‘reward’ to government

Posted August. 08, 2015 07:21,   


Lotte Group said on Friday that it will newly hire 24,000 people through 2018. The move comes one day after President Park Geun-hye urged ‘resolution of youth unemployment’ in her statement to the public. The measure also seems to be related with the initiation of collective pressure on Lotte by the National Tax Service, the Fair Trade Commission, and the Financial Supervisory Service. Earlier, Hanwha said on Sunday that it will hire 17,596 people, while SK Group said on Wednesday it is implementing a ‘project to create jobs for youth’ that support startups by 20,000 people. It is welcome news that conglomerates are racing to create jobs for youth in succession at a time when the youth unemployment rate is very high. However, since the measure has been taken at a time when all three groups will likely be given special pardon on the Liberation Day on August 8, or when the owners’ families are under criticism for dispute over managerial control, they apparently seek to give good impression to the government.

It is problematic that employment of human resources, the most important business strategy for companies, is devised due to the government’s pressure or political reason. Notably, Lotte announced early this year that it would hire 15,800, but since it failed to disclose how many of them non-regular workers are but raised the figure on Friday, the measure was apparently devised hurriedly. It remains a legendary story in the history of the Korean business community that Kukje Group was completely dismantled because Chairman Yang Jeong-mo of the conglomerate arrived late at a meeting among business leaders at the presidential office during the Chun Doo-hwan administration. Like a rollcall by the presidential office during the authoritarian era, announcing employment plans, which target pardon from the presidential office, is also awkward as well.

On July 24, President Park invited owners of conglomerates that established 17 Creative Economy Innovation Centers nationwide, and urged them to increase employment. Deputy Prime Minister for Economy Choi Kyung-hwan also held a private-public sector meeting with business leaders on July 27, and announced a ’200,000 plus project,’ which calls for creating 200,000 job opportunities for youth through 2017. It is questionable what activities the government has proactively conducted in order to prompt companies to create jobs, apart from revision of the Tax Act that calls for tax exemption of 5 million won (4,290 dollars) when a company hires a youth.

It is difficult to create quality jobs if the government effectively pressures conglomerates. The fundamental solution is to create an environment for companies to invest in Korea and ease burden through labor market reform. As Kim Dae-hwan, chairman of the Economic and Social Development Commission returned to office on Friday, the tripartite commission resumed efforts to push for labor market reform. The commission should seek compromise to the extent possible, but if this does not work, it should move towards a flexible labor market even by using ‘Plan B,’ which entails composition of a new committee with experts, in order to increase youth employment.