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Korea saw 140,967 temporary jobs disappear during the first half of this year. This was the biggest drop in temporary jobs since the first half of 1998, right after the Asian financial crisis, when 275,000 jobs disappeared. Due to unfavorable conditions in the overall job market, only 191,500 jobs were created during the first half of this year, far fewer than the 280,000 jobs created during the same period last year.
The fact that more than 140,000 temporary jobs disappeared while some 190,000 jobs were created demonstrates how the impact of a slow economy is being focused on the low-income bracket. Temporary workers mostly work at construction sites and in restaurants on a day-to-day basis. With the economy slowing down, those jobs are the first to disappear.
Early in the morning every day, people flock to employment agencies in search of jobs, even manual labor. But most of them go back home empty-handed. Not only is there no work, wages have gone down as well. It¡¯s easy to hear people say that hauling bricks on a building site only pays W75,000 (US$1=W1,017) a day now, while it used to pay W120,000. Others say working in a restaurant used to pay W1.2 million a month, but this has fallen to between W800,000 to W900,000. Consumer prices are going through the roof, but wages are dropping, making living conditions tougher for low-income households.
It looks like the situation will continue for the time being. Offering some solace, global oil and raw materials prices have gone down recently, but still not enough to have a positive impact on our economy. Consumer prices are expected to remain volatile due to hikes in electricity, gas and other utility charges. That¡¯s why the monetary policy committee of the Bank of Korea raised its key interest rate by 0.25 percentage points to 5.25 percent on Thursday. The move is necessary to stabilize consumer prices. But another result of the move will be a reluctance by businesses to invest more, which in turn will lead to a decrease in jobs, thereby increasing the pains felt by low-income households.
The government has come up with a plan to help 13.8 million low-income Koreans by offering between W60,000 to W240,000 in fuel price refunds, while lowering mobile communication fees. That¡¯s expected to cost the government W3.14 trillion, but the actual benefits felt by low-income families is expected to be minimal. At the same time, the size of our economy and the government¡¯s fiscal capacity make it difficult to expand the size of such aid.
In the end, the only solution is to create more jobs by getting businesses to increase investment. The government has been saying it would ease unnecessary regulations in order to stimulate corporate investment, but not much has actually been done. A major reason for this is that the National Assembly has been unable to set up even individual committees as lawmakers spend their time squabbling. The government and the National Assembly must go beyond lip service and take actual steps to ease the financial burden on low-income households.
Existing policies must be improved, but new ones need to be devised as well to improve the efficiency of welfare spending. Rather than evenly distribute financial subsidies to 13.8 million people, support should be focused on the truly needy who have no way of making ends meet, so that they are able to get back on their feet. Labor unions should cut back on their wage increase demands, and management should strive to keep jobs from being cut. The reverberations of economic hardships on low-income families go beyond that segment, leading to a sense of anxiety throughout our society.
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