S. Korea seeks to impose levies on hiring of irregular workers

South Korea is moving to levy fines on large companies that hire an excessive number of irregular workers, as part of the new administration’s efforts to create quality jobs and boost the economy.

The Presidential Committee on Job Creation announced Thursday a set of measures, including the plan, to be implemented during Moon’s presidency. The measures include the removal of irregular jobs, the creation of jobs in the public sector, an increase of the minimum wage and the reduction of working hours.

“President Moon Jae-in’s economic policy starts with jobs and ends with jobs. We will restore the virtuous circle of growth, jobs and distribution,” said Lee Yong-sup, vice chairman of the committee in a press briefing at Seoul Government Complex.

“Within 100 days after President Moon’s inauguration, we will redesign the government system to focus on creating jobs,” he said. “We will rapidly push for projects that the government can get done by itself. For tasks that need a long-term approach, we will draw a five-year road map.”

In a display of President Moon Jae-in’s determination to eradicate irregular jobs, Lee said the committee would levy fines on large companies that hire too many irregular workers and restrict the hiring of irregular workers “to a reasonable level” and to certain jobs. Such measures will require the National Assembly to pass new legislation.

Asked why small and medium-sized firms, where irregular workers are more prevalent, are excluded from the system, he said, “Large companies have the capacity not to hire irregular workers. But they use irregular workers because it is easy to fire them. So we are applying the rule on conglomerates first.”

But it will not forcibly pressure the public sector, he said. Instead, it will seek a social consensus and push to pass the necessary legislation to put in place such measures.

The committee also said it will lay out a plan to remove all non-regular jobs and create 810,000 jobs in the public sector, which Moon has said will pave the way for the private sector. The government will give tax incentives to companies turning irregular workers into regular ones.

Creating quality jobs and improving labor conditions was President Moon’s key election pledge, which he believes will revitalize the economy and tackle widening inequality. Under his direct supervision, he set up the committee to oversee plans to add jobs.

A report by the Korea Labor Institute showed that most irregular workers are excluded from social safety nets and receive only half the wages of regular workers. Non-regular workers accounted for 32 percent of the entire workforce in Korea, as of the end of March 2016.

According to the report, only 36 percent of irregular workers had state pension subscriptions, compared to 83 percent for regular workers. Some 45 percent of irregular workers received health insurance benefits, compared to 86 percent for regular workers. The monthly average wage of regular workers was 2.79 million won ($2,486) in 2016, compared to 1.49 million won for irregular workers.

To foster job creation in the private sector, the committee said it will ease regulations, expand tax incentives, establish a new ministry of SMEs and devise a long-term plan to create a startup-friendly environment and cope with the “fourth industrial revolution.”

It also reaffirmed its plan to raise the minimum wage from the current 6,470 won to 10,000 won by 2020 and reduce working hours from the current 68 to 52 hours per week.

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)