The Korea Herald

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[Editorial] Job growth road map

The government is aiming too high

By Yu Kun-ha

Published : June 5, 2013 - 19:57

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The government has unveiled a comprehensive job creation road map to attain President Park Geun-hye’s pledge to boost the nation’s employment rate from the present 64.2 percent to 70 percent by 2017.

To achieve the goal, the road map calls for creating a total of 2.38 million jobs, or 476,000 per year during the next five years, a tall order given the economy’s limited job-creating capacity.

The blueprint rests on three pillars: expanding part-time employment, fostering “creative” service businesses, and reducing working hours. The centerpiece is a proposal to create about 1 million “decent” part-time positions, accounting for about 40 percent of the jobs to be created during the period.

An intensive drive to encourage part-time employment will be launched next year, starting with the public sector. The government will begin to hire civil servants and public school teachers who are regular staff but work on a part-time basis.

But a majority of the part-time jobs will have to be created in the private sector. To incentivize companies, the road map proposes to offer tax credits and subsidize social insurance payments for creating part-time positions.

To facilitate the expansion of part-time employment, the scheme also calls for reducing the legally permissible maximum work week from the current 68 hours to 52 hours by defining holiday work as extended work. Currently, the Labor Standard Act has no provision on holiday work, allowing employers to exclude holiday work from the stipulated 12 hours of extended work per week.

Whether the government’s strategy works or not depends on how job seekers will view part-time employment. Currently part-time jobs are mostly irregular and underpaid and, as a result, are shunned.

Officials say newly created part-time positions will be different. To ensure that part-timers are not discriminated against, the government plans to enact within this year a law on the protection of their rights.

Officials note that European countries, such as the Netherlands and Germany, boosted their employment rates by encouraging part-time employment. Yet they have to realize that the underlying labor market conditions are widely different between Korea and those countries. There is no guarantee that a strategy that succeeded in foreign countries will also work in Korea.

They also need to heed a recent warning from Hyundai Research Institute: Job growth without economic expansion is a more serious problem than economic growth without employment expansion.

The institute cautions that if the government tries to add a large number of jobs to the economy in a short period of time, it could worsen the quality of employment and impede productivity growth, thus hurting the sustainability of the country’s economic growth.

In this regard, the institute recommends that the government push back the target year from 2017 to 2020.

The recommendation deserves consideration, given that the government’s road map is based on the somewhat rosy assumption that the economy will grow at 4 percent a year for the next five years. That is a level higher than the nation’s potential growth rate, which is estimated at 3.8 percent.