South Korean President Moon Jae-in hosted an expanded economic ministerial meeting on Monday and was briefed on the economic policy directions for the second half of the year by Deputy Prime Minister Hong Nam-ki. Measures to create more jobs by spending tax revenues and encourage consumption with credit cards, etc. were included in the briefing. “The top economic priority of the second half of this year is to create jobs and reduce gaps for a full recovery,” said President Moon, urging the swift allocation of the second revised supplementary budget.
The government decided to use the second revised supplementary budget to create over 150,000 additional jobs, including 20,000 to 30,000 jobs for the youth in the artificial intelligence and software sectors. The overall plan is to use the government’s financial budget to add 1,447,000 new jobs this year, including 1,042,000 jobs that were part of the main budget and 255,000 jobs added with the first revised supplementary budget in March. In addition, 5,000 deposit-based rental homes will be provided to the youth at affordable prices near colleges and subway stations, and financial products with favorable conditions for the youth will be launched in July. Various political resources – jobs created with tax and housing supports – are mobilized to please those in their 20s and 30s.
It is crucial to provide employment opportunities to the youth who have struggled to find their first job outside of school since COVID-19. However, adding more numbers is likely to lead to financial waste considering the situation that many of the 600,000 jobs planned for this year are being abandoned by the youth as they only involve simple tasks that are not helpful to one’s career.
In order to create more jobs desired by the youth, large South Korean companies should boost their domestic investment and small business owners should be given incentives to hire. However, the government’s support for the research and development and facility investment of the three major national strategic businesses – semiconductors, batteries, and vaccines – is far below the level of the U.S and other countries. Its support measures for South Korean companies returning to the country also excluded those returning to Seoul or nearby regions.
However, there are many factors in the South Korean economy that may further exacerbate youth unemployment. The expansion of the 52-hour workweek system to businesses with five to 49 employees, which will be enforced starting next month despite the opposition of small and medium companies and venture companies, will worsen businesses’ challenges, negatively affecting employment opportunities. In addition, small business owners are delaying hiring new employees as two major trade unions are demanding a minimum wage of over 10,000 won. If the government does not listen to the voice of businesses, jobs wanted by the youth will not be created easily regardless of how much budget is poured into them.