[Editorial] Surging unemployment

By Korea Herald

Bailout funds must be paid quickly, social safety net tightened

Published : Mar 27, 2020 - 10:40
Updated : Mar 27, 2020 - 10:40

South Korea faces an unemployment surge due to the novel coronavirus crisis. Even before the outbreak, the employment situation was already in bad shape. Employment growth was barely buttressed by fiscally created part-time jobs for those aged 60 or older. Jobs for those in their 40s were on the decline. Manufacturing kept shedding jobs for 21 straight months through December. Now with the novel coronavirus a worldwide pandemic, Korea’s job situation is rapidly worsening.

The movement of people and goods stopped all over the world due to a global lockdown. Production and consumption both contracted, and sales plummeted. The pandemic threatened the existence of not only the self-employed and small and medium-sized businesses, but also large companies in almost all industries. Downsizing has become unavoidable.

If an employee loses a job in this slump, it is virtually impossible to find a new one. Job losses mean the breakdown of a household economy. They undermine not only the livelihood of a family, but also child-rearing, causing wide-ranging social and economic damage.

The government must build a social safety net for the jobless, particularly the economically disadvantaged, to help them sustain livelihoods and get on their feet again.

Data shows the severity of the unemployment crisis.

According to unemployment offices, 103,000 people filed for unemployment benefits across the country over the first 19 days of this month. The number is a 30 percent increase from a year earlier.

From Jan. 1 to March 20, about 17,800 businesses filed for wage subsidies from a government fund to stabilize employment. The figure is an 11-fold increase on-year.

Filings for unemployment benefits and wage subsidies were concentrated on small travel agencies, lodging facilities, restaurants and transportation businesses.

Particularly concerning is the worsening employment situation of large companies.

Airlines sent about 10,800 employees on furlough. Contractors to airlines and airports fired their workers en masse. An automaker, a large retailer, heavy industry companies, a shipbuilder and a display manufacturer are cutting staff through early retirement and voluntary resignation. Hiring has been frozen. Most companies have postponed or canceled hiring. Even part-time jobs in microenterprises are vanishing.

The Korean economy got into a dire situation due to the bankruptcy of Daewoo Group in the wake of the Asian currency crisis of 1997-98. Koreans experienced the jolt of the collapse of large companies. A host of contractors and subcontractors fell like dominos, and banks tumbled. A great many people lost jobs and families broke apart.

Massive layoffs must be avoided at all costs. Companies should try to refrain from laying off workers, while unions should be willing to share the pain by accepting wage cuts to protect jobs.

Considering the gravity of the current crisis, cutting the minimum wage is worth consideration. Labor-friendly policies must be reviewed.

The best livelihood measure now is to protect jobs. The government must do everything it can to help businesses keep employees on the payroll.

The administration announced a total of 100 trillion won ($81.4 billion) in a corporate emergency relief package. It is imperative that the fund be funneled quickly to marginal businesses to protect jobs. But the process is reportedly too slow because it has been overwhelmed with filings for bailout money. It is urgent to set up a system to expedite the process.

In times of a jobs crisis, those economically disadvantaged such as day laborers, as well as employees of subcontractors and microenterprises, tend to suffer severe hardships first. The government should ensure they do not fall into unemployment insurance blind spots.

It needs to increase the budget for unemployment benefits as filings are mounting. The government earmarked 9.5 trillion won for the budget, but it appears likely to fall short. It should also consider extending the period of unemployment benefits if it can afford to.

The Ministry of Employment and Labor expanded the wage subsidies budget from 100 billion won to 500 billion won, but this too is likely to run out early, considering the rapidly worsening financial difficulties of companies.

In preparation for a protracted pandemic, the government must build a tight social safety net -- now.

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The Korea Herald by Herald Corporation