Virus-triggered job loss

Take bolder measures to stave off crisis

The economic shock of the coronavirus pandemic has brought about South Korea's first net job loss in a decade. According to Statistics Korea, the country lost 195,000 jobs last month from a year before. This marked the first year-on-year monthly decline since January 2010 and the steepest fall since May 2009 when the country was undergoing the impact of the 2008 global financial crisis.

More worrisome is that the job loss is only the beginning of an unemployment crisis. Experts warn that more jobs will be lost in the months to come when the country feels more pains arising from the pandemic's crippling economic impact. That's why the authorities should take bolder measures to minimize the fallout on the labor market.

The job loss data shows that part-time workers and day laborers have taken the brunt of the virus-driven economic difficulties. The number of those workers, mostly in wholesale, retail, restaurant and hotel businesses, nosedived by 420,000 in March. This job crisis is expected to spill over to the country's key industries, including airlines, shipping, petrochemicals and automotives.

Now, all economic players ― businesses, individuals and the government ― should pool their wisdom to maintain employment. Their joint response is imperative to help prevent further job losses. It is also necessary to expand the social safety net to help those who are vulnerable to the economic tsunami.

The most effective solution appears to be a speedy economic recovery. But no one knows when the recovery will come. Even worse, Korea is expected to record its worst economic performance since the 1997-98 Asian financial crisis. This gloomy situation was backed by the 2020 World Economic Outlook report by the International Monetary Fund (IMF) which predicted the global economy to contract 3 percent. The IMF forecast the Korean economy will contract 1.2 percent this year.

Thus, the Moon Jae-in administration should take effective measures to avoid a vicious cycle of economic depression and job loss. Of course, the government has already recognized the serious nature of the aggravating job market. It has also begun to provide state financial support for hard-hit businesses to prevent layoffs.

But the aid program is not enough to cope with mass layoffs which will be inevitable in the course of the severe economic downturn. About 156,000 people applied for unemployment benefits in March, up 24.8 percent from a year before. The number is likely to surge down the road.

Against this backdrop, the government plans to announce a job stabilization package this week. This package should include comprehensive measures to prevent large-scale layoffs and better protect the jobless. Policymakers should consider ways of expanding unemployment benefits and other financial support for both workers and businesses to ride out the hardship.

Furthermore, the Moon administration needs to change its income-led growth policy which has so far failed to create jobs and bring higher wages to workers. The liberal government should no longer stick to rigid ideology-based policies. Instead it must take a more flexible and market-friendly attitude to fend off looming economic woes and the subsequent unemployment crisis.