'New Deal' program

Detailed action plans needed to create jobs

The Moon Jae-in administration has decided to push for a Korean version of the “New Deal” program to protect the country's major industries from any COVID-19 shock and maintain employment levels. The decision reflects the dire reality that the local economy is taking the brunt of the pandemic crisis.

On Wednesday, the government announced that it will draft an additional economic relief package worth 89.4 trillion won ($72.5 billion). It has so far committed to providing 150 trillion won to help hard-hit businesses, particularly small and medium firms, as well as stabilize financial markets and boost the people's livelihoods.

The additional package is more than necessary as the situation is worsening. The country's economy contracted 1.4 percent in the first three months of the year from the previous quarter. This marks the steepest quarterly contraction since the fourth quarter of 2008 when the economy shrank 3.3 percent.

Another setback is exports, the country's growth engine, which nosedived 26.9 percent to $21.7 billion in the first 20 days of April from a year ago. Also troubling is the employment market which saw a loss of 195,000 jobs last month from a year before. About 156,000 people applied for unemployment benefits in March. Even worse, 2.3 million have abandoned searching for jobs.

Against this backdrop, the liberal government is pressing ahead with the Korean-style New Deal program. We welcome this, hoping that large-scale infrastructure projects will create jobs and prop up the crumbling economy. As President Moon noted, maintaining and creating jobs is one of the nation's top priorities.

It is noteworthy that Moon has promised to spend 3.6 trillion won on various projects to create up to 550,000 jobs. His promise is based on the firm belief that it is meaningless to overcome the COVID-19 crisis and tide over its economic impact without avoiding mass layoffs. So his focus on employment is not an option, but an obligation.

Now the question is how to generate such a large number of jobs. The government said it will create a taskforce to set up the New Deal program soon. The presidential office noted that the program will not be confined to building infrastructure. It said the program will concentrate on creating “digital jobs” in advanced fields such as digital infrastructure and big data.

But it is still vague how such jobs in those areas will be created amid the raging economic tsunami. Shouting empty slogans is only a recipe for disaster. Injecting an astronomical sum of relief funds cannot automatically guarantee success. That's why policymakers need to work out detailed action plans.

The government will provide 40 trillion won for seven key industries, including airlines, shipbuilding, automotive and machinery to help them ride out difficulties. Shoring them up could not only prevent mass layoffs, but also buttress the economy. However, financial support for them should be contingent on corporate restructuring and self-rescue measures.

It is also imperative to prevent any waste of taxpayers' money while heeding worries about the growing national debt and the country's deteriorating fiscal health. All economic players should work together to overcome the mounting challenges and embrace the post-pandemic era with hope and vision.