Dr Kim Byeong-ju and I (Tony Michelle) have begun to work on a research supporting the creation of a new One Million Jobs campaign in Korea, recognising the need to offset the effects of ageing of the conventional workforce, and the slow-down in economic growth. The first OMJ campaign begain in 1998 by myself and James Rooney, then of Franklin Templeton, and produced first an English report, One Million Jobs Project, EABC Ltd December 1998, and a greatly extended OMJ report published in Korean by Hankuk Kyongje Sinmunsa in 1999.  The campaign aimed to encourage individuals to start their own business, and to generally re-evaluate the value of Small and Medium Enterprises (SMEs), while identifying jobs which did not exist in Korea to an expected extent because of obstructive regulations. This was taken up by the media through the intermediation of Lee Han-woo (and later Lee Charm, Head of the Korea National Tourist Office) which resulted in five TV programmes per week on different channels on SME retail and restaurant makeovers to increase income, a continuing series of articles in the Hankuk Kyongje, the launch of an OMJ Fund by Templeton and Hyundai Securities, and the much more successful ”Buy Korea” fund by Hyundai Securities alone, plus a series of interventions by the Seoul Bank, under the leadership of Chungwoon Kang which produced 80,000 taxi stickers “let’s create 1 million jobs”, OMJ credit cards, OMJ savings accounts and many other initiatives.[2]   The campaign effectively ended when Seoul Bank was absorbed by Hana Bank and with the general return to prosperity in 2001. During this period about 2.1 million jobs were added to the economy. 

Fast forward to 2015-2016 when although the level of official unemployment is one of the lowest in the world, and even youth unemployment is very reasonable compared with the United Kingdom or Spain, the number of young people not in education, employment or training (NEET) is high.  Labour force participation of women over 40 is very low by OECD average and 7 million citizens are in the baby boomer retirement zone, most without adequate pension provisions. In conventional thinking, growth, and growth potential are expected to fall as the population ages.

The revived OMJ report therefore looks at different parameters, reviewing how new employment raises the GDP growth rate, and how this could evolve in a short space of time.  The report will support a more organized campaign led by a high level committee working with Yonhap News, (which from April 1 took over WorkTV), and supported by the KCMC (Korean CEO’s Association of Multinational Corporation Organization), with talk concerts planned in key start up centres, and backed by a comprehensive on line social media campaign aimed at raising confidence, exploring opportunities for different kinds of jobs and businesses and exploring retraining opportunities.  The expectation is that the campaign will then go viral as it did in 1999-2000.

While the 1998 report started from the standpoint of regulations blocking productivity and job creation, and the lack of regard for SMEs which provide about 90% of all jobs in Korea, the 2016 report starts with the concept of labour fluidity, a term first coined by William Beveridge in 1943 in Pillars of Security, a prelude to his report that created the famous report which founded the British Welfare State, and recently taken up by US labour and financial economists after a conference on Labour Fluidity.[3]  In a recent paper “Understanding Declining Fluidity in the U.S. Labor Market,” Raven Molloy, Christopher L. Smith, and Riccardo Trezzi of the Federal Reserve Board of Governors and Abigail Wozniak of the University of Notre Dame examine fluidity across eight measures of labor to which we have added two more [4]:

• Market transitions (flows from employment to unemployment)
• Steps from unemployment to employment;
• Flows from employment to out of labour force
• Flows from out of labor force to employment
• Job to job changes;
• Inbound and outbound migration
• Job creation
• Job destruction

We added

• Movement between employment, education and NEET
• Life cycle flows between first job and retirement

A review of Korean data shows that the churn of persons of economically active age is distinctively gender specific, more so than in other OECD countries, especially related to the failure to return to work by women in the 40s and 50s after child-rearing.  Equally despite very high levels of education the preference of young people for NEET status is also marked – if young people fail to get what they regard as a good job, either in chaebol, finance or government, they do not turn to other economic activities, despite the fact that such jobs constitute only 15% of all Korean jobs.   These are just examples of the peaks in the data analysed so far.  

Any job creation plan should begin with an updated life cycle model, and close granular attention to not only 5 year cohorts, but even each year’s cohort.   The Korean life cycle “model” has moved rapidly over the last 50-60 years meaning that particular cohorts are “stranded” - a term we use to imply a person or cohort of citizens have reached the end of the career they started in, and need retraining or skill refocus to start a new life.   Additionally the changes in society mean few older generation live with their off-spring, requiring them to continue to work, largely for livelihood, but also for self-satisfaction, to a later and later age.

By concentrating on the life cycle and not the conventional economically active ages of 15-65, we are challenged by the data.  For most Koreans economic activity starts after the age of 21 and runs on after 65[5].  Unfortunately Korea, like many OECD countries does not monitor life beyond 65 in the same way the years of economic activity 15 – 65 are monitored, and we have a data deficit on older workers.   This is all the more disturbing when we consider that in February 2016 of some  262,000 new jobs created, 24,000 went to those in their 20s, 78,000 to those in their 50s and 160,000 to those in their 60s.(figures to be reconfirmed)[6]

Job creation is closely related to business creation or expansion. When 90% of the workforce work in SMEs(recheck name), the confidence of entrepreneurs and the general public is extremely important, since a further missing element in the Korean labour equation is the comparative absence of young entrepreneurs.  As Keynes wrote, confidence is crucial, and surveys show that Koreans are the least confident about the future of any of the nations surveyed by AC Nielsen.[7]

"We are merely reminding ourselves that human decisions affecting the future, whether personal or political or economic, cannot depend on strict mathematical expectation, since the basis for making such calculations does not exist; and that it is our innate urge to activity which makes the wheels go round, our rational selves choosing between the alternatives as best we are able, calculating where we can, but often falling back for our motive on whim or sentiment or chance.[8]"

Under the current policy for “creative employment” we argue that policy makers have ignored the confidence factor, and have concentrated on hi-tech job creation – which we summarise as the pursuit of would be unicorns – start ups which take off into funding where a market valuation of over US$1 billion can be achieved in a short time – companies almost as rare as unicorns.  Korea has at the present time just two, although Nahm identified ten other older start ups including Naver (2004) as unicorns.[9]

From the point of view of the economy, business creation = job creation, quite simple jobs can be as effective as hi-tech jobs if there are enough of them.   If 1 million of the 5 million housewives aged 40-59, currently outside the labour force, took new but essentially part time jobs paying 1 million won per month, Korean GDP in that year would rise 0.4%.[10]

Expected results

What are the expected results?  The report merely indicates the way that jobs could be created.  The actual creation depends on viral impact of the ideas spread through conventional media (Yonhap News and WorkTV plus Social Media and those media forms between conventional and social.  These steps concerns the marketing of the ideas of the report.[11]

• The first aim is to provide the tools to raise confidence of Koreans in their own estimation to the levels of Japan and China, and take other measures to turn young Korean’s thoughts towards entrepreneurship, at least to the level of neighbouring countries.[12]
• The second is a clear analysis of the barriers to fluidity and ways to overcome them. Our current opinion is that the Labour Laws are a small part of a much bigger problem which includes social attitudes, and the lack of respect for the dignity of small businesses and employees, compared with big business owners.
• The third is to encourage all value added business creation( not just high tech,) and the return to work in an SME as worker or entrepreneur providing guidance and support for the successful implementation of small service businesses which currently too often fail.
• The fourth is to expand the range of social service occupations and part time work for those who for a variety of reasons choose such occupations, including the creation of more sophisticated civil society organizations
• The fifth is a series of measures for those who are forced to leave their present employment, and risk becoming “stranded” – offering support and training tiered according to need to allow re-entry in an upgraded work position – taking into account expected levels of job destruction which in 2016 is expected to exceed job creation without the OMJ.
• The sixth is to create a more effective information exchange on job creation and entrepreneurialism
• Finally the report contains a list of policy recommendations by age and gender cohort for study by the MOLE and local government.

When Beveridge advocated national planning for labour fluidity in 1943, he was quick to suggest that national planning does not need to be done at national level, but could well be pushed down to a local level. [13]  In Korea we have seen both Seoul and Seongnam city begin various income support schemes, but not job planning or labour fluidity planning.  [14]

It is recommended that in conjunction with local labour offices, local government takes this job seriously within guidelines indicated in the report we are writing.

[1] Tony Michell has been a visiting professor at KDI School since 1999, while running a business consultancy dealing with foreign investors.  Earlier he had worked for the Economic Planning Board, World Bank and UNDP on critiques of the Fourth, Fifth plans and KDI’s Fifteen Year Plan in the later 1970s and early 1980s, BJ Kim joined KDI School in 2015 and a long career in government service

[2] The Buy Korea fund was the most successful in Korean history through selling to Korean housewives, “Success of Buy Korea Fund built on housewives rally causes concern”  Janet.E.Lee, WSJ May 6 1999 http://www.wsj.com/articles/SB925929286598489339; C.Kang From the Front Lines at Seoul Bank-IMF, https://www.imf.org/external/pubs/ft/wp/2003/wp03235.pdf

[3] William Beveridge Pillars of Security, London, 1943, p.46

[4] “Understanding Declining Fluidity in the U.S. Labor Market,” Raven Molloy, Christopher L. Smith, and Riccardo Trezzi of the Federal Reserve Board of Governors and Abigail Wozniak of the University of Notre Dame

[5] The same phenomenon is troubling students of global demographics where across the western world work after 65 has growth sharply, challenging the conventional view of ageing economies.
Demographic profile of the older population, “working age is being redefined” in Global Demographics, Does Germany need migrants to have enough workers, http://www.globaldemographics.com/insight-september-2015; See also www.un.org/esa/population/.../worldageing19502050/pdf/90chapteriv.p...

[6] http://kostat.go.kr/portal/eng/pressReleases/5/2/index.board. Economically Active Population Survey in February 2016  Note these new jobs are mainly temporary new jobs related to the lunar new year which attract older people, hence the age proportion

[7] Keynes, The General Theory of Employment, Interest and Money,  AC Nielsen Global confidence index

[8] Keynes The General Theory of Employment, Interest and Money

[9] John Nahm Meet Korea’s Billion Dollar Start Ups http://venturebeat.com/2014/09/19/meet-koreas-billion-dollar-startups/

[10] GDP is usually measured as C+I+G+(Ex-I) or Gross Factor Output – adding the output of each sector deducting intermediate costs.  The income measure W(ages) + R(ents) + i(nterest) + PR(ofits) + indirect taxes+ depreciation is the most appropriate for job creation.

[11]  The use of modern marketing techniques to “sell” economic ideas is an interesting sub-study of marketing science for which the fast changing rules are being written as we write, although the ideas started in the 1970s.  http://smallbusiness.chron.com/selling-marketing-ideas-1471.html; http://appdataroom.com/sell-innovative-marketing-idea-inside-organization/;  tamara monosoff, three steps to selling your idea, http://www.entrepreneur.com/article/83496; Keith Snavely, Marketing in the Government Sector: A Public Policy Model, The American Review of Public Administration December 1991 vol. 21no. 4 311-326; see also  Stan Polit,The Organizational Impacts of Managing Social Marketing Interventions, Social Marketing Quarterly June 2012vol. 18 no. 2 124-134

[12] Hyundai Economic Research Institute (full reference to come)

[13] William Beverage, Pillars of  Security

[14] Employment welfare for the youth, how was it made possible? With a focus on the ‘youth activity support project’ of Seoul Metropolitan City, LEE Tae-soo Professor, Division of Social Welfare Kkottongnae University, Korea Labor Review Spring 2016, Vol 58

By Tony Michell