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(LEAD) Finance minister hints at economy-boosting measures

2018/07/12 13:34

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SEOUL, July 12 (Yonhap) -- South Korea's chief economic policymaker said Thursday that the government may draw up a set of measures to boost domestic demand during the second half of the year in a bid to help create more jobs and tide over external conditions such as a growing trade tussle between the United States and China.

"Job creation numbers are not good, and the situation is the worst since the financial crisis," Finance Minister Kim Dong-yeon said in an economy-related ministers meeting. "The situation is not likely to improve drastically ... the point is that innovative growth may be the solution to job creation," he said.

The minister said the government is planning measures to boost domestic demand.

The number of newly added jobs has stayed slightly above 100,000 per month over the past five months in the aftermath of corporate restructuring and a hike in the country's legal minimum wage.

The manufacturing sector shed 120,000 jobs last month, marking a decline for a third straight month. The education service sector also saw its employment drop to 107,000 last month.

Since May, the government has been implementing a 3.9 trillion won (US$3.69 billion) extra budget largely to create jobs for young people amid deepening concerns about high unemployment, which the government warned would have catastrophic consequences.

The government hopes that with the pledged support, youth unemployment could fall below 8 percent by 2021 and upwards of 220,000 jobs could be added annually through 2021.

Seoul's push comes as President Moon Jae-in has called for all-out efforts to create quality jobs for young people and warned that the high jobless numbers among young adults is a national disaster.

The extra budget is the second of its kind under the Moon administration. Last year, the government got parliament to approve an 11 trillion won supplementary budget that focused on creating high quality jobs.

The finance minister also said that the sluggish job market is in part caused by the country's minimum wage hike, adding that an additional wage adjustment should be carried out in a gradual manner.

"I think the minimum wage hike decisions should be take into consideration overall economic conditions, job creation and other factors," the policymaker said.

The Moon Jae-in administration increased the minimum wage for all workers by 16.4 percent this year to 7,530 won from 6,470 won in 2017, after setting a goal of raising hourly pay to at least 10,000 won by 2020.

The government said the hike is aimed at income-led economic expansion and a reduction of the pay gap between workers, but critics argue that the increase is actually hurting entry-level jobs and weighing down the local economy.

There have also been concerns that a drastic rise in the legal minimum wage could lead to a drop in employment.

Finance Minister Kim Dong-yeon (2nd from R) speaks during an economy-related ministers meeting in Seoul on July 12, 2018. (Yonhap) Finance Minister Kim Dong-yeon (2nd from R) speaks during an economy-related ministers meeting in Seoul on July 12, 2018. (Yonhap)

sam@yna.co.kr

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