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(EDITORIAL from the Korea Herald on Jan. 21)

All News 09:23 January 21, 2017

Employment pledges
: Presidential runners should open eyes to challenges from abroad

US President Donald Trump has been pressuring companies to keep or add jobs in his country. He threatened several companies with big ‘border tax’ if they expand manufacturing facilities abroad to make products to be sold in the US.

Ford Motor scrapped a planned Mexican car factory and added 700 jobs in Michigan following his criticism. GM announced a $1 billion investment in its US manufacturing operations, which will create 1,500 jobs. Fiat Chrysler unveiled a $1 billion plan to modernize two plants in the US and create 2,000 jobs. Toyota announced a $10 billion capital investment in the US over the next five years.

South Korea’s Hyundai Motor Group also announced plans to raise US investment to $3.1 billion over five years. Samsung Electronics and LG Electronics are considering building factories in the US for the production of home appliances.

Alibaba, a Chinese e-commerce giant, promised to bring 1 million jobs to the US. Japan’s Softbank pledged a $50 billion investment, aiming to create 50,000 jobs.

Trump’s aggressive stance toward job creation presents a striking contrast to Korean presidential contenders’ counter-productive or stale approach to employment.

Moon Jae-in, former head of the Democratic Party and front runner in presidential race, announced pledges to create 1.31 million jobs if elected, by expanding the public sector and cutting working hours. He promised to add 810,000 jobs by increasing the number of fire fighters, police, teachers, social-welfare civil servants and noncommissioned officers. Moon said he will create 500,000 jobs through less working hours and job sharing.

His job pledges, however, do not address how to induce companies to add jobs.

Despite an expectation that hiring 810,000 more government employees will cost taxpayers tens of trillion won more, Moon did not mention how to fill the coffers to have them on the payroll. To increase government jobs is a self-defeating policy which will certainly deteriorate the public finances. It is an easygoing way of adding jobs.

Voters need recall the miserable ending of the bloated, inefficient and expensive public sector of Greece, where political leaders continued to add government jobs only to plunge the country into a debt crisis.

Ban Ki-moon, former UN secretary-general who is trailing Moon in the polls, said in a recent lecture to university students that the nation could add jobs for young people through internships at companies, academic and industrial collaboration and overseas job opportunities. The measures sound hackneyed, though he has not announced his full-blown pledges yet.

The latest government job measures are bland.

Economic ministers decided in a recent meeting to advance stimulus by executing 33.5 percent of all job budgets and recruiting 17,000 of the annual 60,000 public-sector new employees in the first quarter. Other measures included raising business startup funds for young people and creating senior government positions to deal exclusively with employment affairs.

The government had taken diverse employment measures as well last year, but they produced little results. The number of jobless people topped 1 million for the first time since 2000 when the current statistical method was adopted. The youth jobless rate jumped to an all-time high of 9.8 percent. The employment outlook this year is dark, too.

Without companies adding new jobs, government measures are bound to lose steam soon. Most national leaders know the importance of jobs created by companies. Hence they deregulate or offer incentives to attract companies and jobs.

But Korea seems to be going in the opposite direction. A presidential contender pledged to tighten control over the top four chaebol. Another promised to break up all of the chaebol. Problems with chaebol should be fixed, but reforms near to chaebol-bashing will put a damper on enterprise activity.

South Korea is an export-driven economy, but its exports are being held back by strong head wind. China has rebuffed some of its export products in an apparent retaliation for its decision to deploy the Terminal High Altitude Area Defense battery, a US antimissile system, in its territory.

Trump will likely turn up the heat on Korea on the trade front. During the campaign, he denounced the US-Korea free trade agreement as a disaster and a job-killing deal. He is expected to seek renegotiation of the trade deal.

As Korea’s economic environment is changing fast, presidential runners are fixated on getting votes. They must open their eyes to external challenges as well.
(END)

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