The country recorded the first net increase in employment in 13 months last month, in what government officials described as the latest sign that the labor market is improving after a yearlong slump mainly caused by the coronavirus pandemic.
The number of employed people reached 26.92 million in March, an increase of 314,000 from a year earlier, according to data released by Statistics Korea last week. Buoyed by the figures, Finance Minister Hong Nam-ki, who concurrently serves as deputy prime minister for economic affairs, said the job market was expected to continue to improve in April and beyond.
But what should draw more attention from Hong and other economic policymakers was that the manufacturing sector shed 11,000 jobs on-year in March, extending its downward streak to the 13th consecutive month. Before that, the number of manufacturing jobs recorded an on-year decrease for 21 straight months before bouncing back into the positive territory in the first two months of 2020.
The job increase in March is largely attributable to government-funded employment programs, which created mostly part-time jobs for senior citizens.
The number of employed people aged 60 or above rose by 408,000 from a year earlier last month, with the corresponding figures for those in their 30s and 40s falling by 170,000 and 85,000, respectively. Job posts with less than 36 work hours per week increased 16.6 percent on-year in March, while those with 36 or more weekly work hours recording a 3.3 percent increase. In particular, the number of part-time employees who work less than 17 hours per week jumped 35.5 percent.
President Moon Jae-in’s administration has pledged to create more than 1 million jobs with taxpayers’ money this year. This effort will do little to add well-paying full-time jobs, which can be offered more effectively in the private sector, particularly in the manufacturing industry.
The number of manufacturing jobs in the country has continued to decline over the past decade. The downward trend has been precipitated since the Moon administration assumed office in 2017.
According to a recent study by the Korea Economic Research Institute, overseas direct investment by local manufacturing firms amounted to an annual average of 12.4 trillion won ($11.1 billion) from 2011-2020, while foreign direct investment in the domestic manufacturing sector averaged 4.9 trillion won annually during the cited period.
The study analyzed that the gap resulted in the country suffering an estimated net loss of 49,000 manufacturing jobs a year during the period. Over the four years since 2017, the discrepancy between ODI and FDI widened further to 10.3 trillion won on average a year, with the annual average number of net job losses exceeding 60,000.
Moving production facilities abroad in search of cheaper labor and lower taxes can be necessary to stay competitive. But the Moon administration has made the country a far less attractive place to invest by imposing stricter regulations on companies and implementing a string of pro-labor measures. This goes against the intensifying global competition to forge more business-friendly conditions to help bolster corporate investment and create more jobs.
Since last year, Moon has repeatedly emphasized the need to build a corporate-friendly environment but he has done little to translate his pledge into substantial action. With slightly over a year to go before his five-year tenure ends, Moon has little time to accelerate regulatory reforms.
Drastic deregulation is needed particularly to help nurture companies in innovative sectors, which can be more instrumental in adding good-paying stable jobs preferred by young job seekers.
A poll conducted in January of 155 foreign-invested companies here showed that nearly a quarter of the respondents remained reluctant to increase investment due to excessive regulations imposed by the government.
The rigid labor market is also holding back domestic and foreign-invested firms alike from expanding investment and employment. South Korea ranked 145th in a list of 162 nations surveyed by the Fraser Institute, a Canadian public policy think tank, on economic freedom in terms of labor market regulations.
The Moon administration and ruling party lawmakers have continued to take pro-labor steps, including the passage of a revised law that allows dismissed employees to join trade unions. Efforts should not be spared to level the playing field between management and labor to make it easier for companies to hire new workers.
