This study aims to draw policy implications for job creation in Korea by analyzing changes in the economic circumstances surrounding the country.
Korea’s employment rate, which is the ratio of the number of employed people to the population aged 15 -64, stood at 63.7% right before the foreign exchange crisis in 1997. The rate dropped to 59.2% in 1998 and stood at 60% in 2003. The employment rates of the US, Japan and UK, in 2002, were 71.9%, 68.2%, and 72.2%, respectively. Korea’s income inequality and poverty rate also worsened after the crisis. Its absolute poverty rate more than doubled from 5.9% in 1996 to 11.5% in 2000, which placed Korea in the high poverty rate group among OECD countries. The proportion of poor countries rose from 9.9% in 1996 to 16.2% in 2000. Rising unemployment was the main reason behind worsening income distribution after the 1997 crisis. One of the reasons the subsequent fall in unemployment did not lead to more equitable income distribution is that many of the unemployed became part of the economically inactive population.
The Korean government’s job creation plan is based on the strategy to create a business-friendly environment because businesses are job creators, as well as to create virtuous circles between growth and employment. However, the plan needs more detailed courses of action. It still contains government-driven job creation objectives, and it is unclear on how employment leads to desirable goals such as solving poverty or improving income distribution. Transparent and concrete policy measures are needed to ensure that newly created jobs lead to the desired goals.
Government policies to help the private sector create jobs must be based on the following objectives: stable macro-economic policy, a flexible labor market, sound labor incentives, active labor market policies, an improved job training system, strengthened competition through regulation reforms, enhanced productivity through technological innovation, and effective support schemes for the corporate sector.
한국경제 구조변화와 고용창출(Structural changes and job creation in the Korean economy)
|Series Title; No||정책포럼 / 2004-05|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < General
Social Development < Employment
|Holding||KDI; KDI School|