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[Economic Opinion] The Key to Rebound: Forward-Looking Deregulation

In the midst of accomplishing one of the best growth performances among OECD countries despite the COVID-19 pandemic, the employment statistics for January 2021 was 5.7 percent. The number of jobs declined almost 1 million in comparison to the same month last year, and the unemployed labor force reached 1.6 million.

This was not, however, entirely unexpected. The second and third waves of the pandemic this past winter devastated the hospitality industries as well as transportation industries all around the world, and Korea was no exception. On top of this, there was a base effect this month as the job numbers surged more than a half million in January 2020, making this year’s figures especially poor.

Now, it is, as it always has been, an imperative challenge for the authority to reverse the employment numbers. For the moment, the government has been pouring accessible resources into various emergency measures such as unemployment benefits or subsidies. But appropriations ran so early that a series of supplementary budgets were inevitable. More seriously, such support measures are no more than short term temporary ad hoc devices, and not meant to create solid and permanent jobs.

Sound jobs are provided only by businesses, and these businesses require a fresh air of investments and deregulation. As this government has particularly emphasized economic justice and fair trade since its inception in 2017, most businesses have come to terms with the new regime of fair trade and economic justice.

Deregulation here does not mean returning to the old regime. It does not mean merely resetting the clock back to the times of the past. There is no way in going back to the minimum wage figures of the past, nor nullifying the 52-hour work week program. Those are now considered by many as the “dark ages,” and there is no need to regress. Here, deregulation means clearing the path forward for businesses in the future. All political leaders across the aisles agree on this point. Forward-looking changes are the core of deregulation. For example, there are new areas of businesses in new technology, green environment, health, and contact-free services.

Although the master plan of the Korean New Deal consists of a good cluster of programs, there should still be many other potential opportunities elsewhere. Despite the wishes of some political leaders, many old regulations on the table unintendedly hinder the sprouting of new firms and ventures, and these regulatory blocks are unseen even to the eyes of the officials who handle them. Therefore, deregulation is in the hands of open-minded bureaucrats, and they have the key to maintain the country on the course of growth.

By Professor Se Don Shin
Dean, Sookmyung Women’s University

The opinions expressed in this article are the author’s own and do not reflect the views of KOTRA

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