Tax 3 Trillion Short-term Job Employment Retention Rate 38%...Expected Decline (Comprehensive)

13.5%P Drop from 2019
Government Support Cut Leads to Poor Performance
High-Quality Jobs and Platform Career Development Support Needed for Youth
Employment Minister Ahn Kyung-duk: "Maximize Private Employment Induction"

[Sejong=Asia Economy Reporter Moon Chaeseok] It has been revealed that the employment retention rate of direct jobs created by the government significantly declined last year. This rate measures how much government-funded jobs are connected to private employment after the support ends, indicating that once the support stopped, these jobs no longer functioned effectively. This is the result of the government focusing solely on creating jobs regardless of market demand.

According to the "Efficiency Improvement Plan for Fiscal Support Job Projects" reported by the Ministry of Employment and Labor to the Cabinet meeting on the 8th, the employment retention rate of government direct job projects last year was 37.8%, a drop of 13.5 percentage points from the previous year. This means that out of 10 people, fewer than 4 maintained their jobs last year, down from 5 in 2019. This is the lowest figure since the government began evaluating fiscal support job projects, including direct jobs, by year in 2018.

The decline in the employment retention rate is because the government focused on job creation through fiscal spending last year, while the private sector's capacity to create jobs decreased. A Ministry of Employment and Labor official said, "The employment retention rate is an indicator of how many people properly enter the labor market after government support ends," adding, "This ultimately means that the structural improvement of South Korea's labor market is slowing down."

The government has so far emphasized creating direct jobs funded by fiscal spending. The number of participants in direct job projects increased significantly from 814,000 in 2019 to 970,000 last year. Professor Yoon Dong-yeol of Konkuk University's Department of Business Administration pointed out, "The government needs to consider whether it has effectively created quality jobs through fiscal job projects."

The decline in the employment retention rate of direct jobs funded by fiscal spending shows that even if the government leads job creation, without private sector support, it ultimately remains a one-time effort. Simply put, for direct jobs to lead to private employment, the government-created jobs must become so-called 'specs' (qualifications), but most direct jobs involve simple tasks, making linkage difficult. According to the Ministry of Employment and Labor, direct jobs include roles such as Five Major Rivers Guardians, garbage collection projects, and illegal fine dust emission prevention monitoring. Last year, turning off lights in empty classrooms was included in the youth direct job project, drawing criticism.

The drop in the employment retention rate can also be seen as a result of the government focusing more on creating jobs than maintaining them. The scale of the government's direct job projects increased from 814,000 in 2018 to 970,000 last year. Additionally, the government invested 2.9451 trillion won in direct jobs last year, including supplementary budgets. The main budget was set at 2.8587 trillion won, a 37.6% increase (780.8 billion won) from the previous year, with an additional 86.4 billion won injected. This can be interpreted as prioritizing maintaining employment rates over creating proper jobs.

According to the "Efficiency Improvement Plan for Fiscal Support Job Projects" reported by the Ministry of Employment and Labor at the Cabinet meeting, the overall evaluation of all fiscal job projects?including direct jobs, vocational training, employment services, employment incentives, startup support, and unemployment income maintenance?was not favorable. Among the 145 detailed projects conducted by the government last year, only 14 (9.7%) received an 'Excellent' rating. Eighty-one were rated 'Good,' 36 'Needs Improvement,' and 14 'Reduced Funding.' Projects rated 'Reduced Funding' may face budget cuts or even termination next year. However, the Ministry did not disclose specific project details by rating. A ministry official said, "We are planning to publicly disclose project ratings to the public by the end of this year."

According to the Ministry of Employment and Labor, the direct job projects with the highest private employment rates are 'Designated Operation of Saeil Centers' (Ministry of Gender Equality and Family, 23.6 billion won invested, 7,777 hired), 'Training of Cultural and Arts Institution Trainees' (Ministry of Culture, Sports and Tourism, 10.4 billion won, 515 hired), and 'Landslide Prevention Teams' among 'Forest Disaster Jobs' (Korea Forest Service, 99 billion won, 12,326 hired).

Choi Young-gi, a visiting professor at Hallym University's Department of Business Administration and former director of the Korea Labor Institute, said, "It is not desirable for the government to set goals such as fostering jobs for specific vulnerable employment groups like the elderly and women and then invest 2 to 3 trillion won annually in direct job budgets without considering the business feasibility of direct job policies." He advised, "It would be better to provide vocational training support to vulnerable groups and create tailored policies that support data and health services during the process of establishing mutual aid associations autonomously promoted by the platform industry."

Professor Yoon Dong-yeol also said, "After the COVID-19 crisis, many countries invested fiscal resources in short-term job projects, but now, as vaccination rates increase and we gradually enter the recovery phase, it is necessary to prepare projects that support career development for platform workers increased by industrial restructuring and provide quality jobs for youth rather than investing in short-term jobs."

The government also announced plans to better link fiscal job projects with the private sector. To this end, it will maximize efforts to guide participants in the National Employment Support System and direct job projects into private jobs. A new indicator, 'Training and Employment Support Linkage Rate,' will be added to job project performance evaluations and reflected in institutional evaluations of employment service agencies.

Employment Minister Ahn Kyung-duk said, "During crisis periods, public job creation and employment retention policies played a supporting role, but going forward, the priority needs to shift to supporting employment in the private sector." He added, "To recover the labor market, we will actively support unemployed individuals, women with career interruptions, and youth to return to private jobs and enter the labor market quickly."

This content was produced with the assistance of AI translation services.