Moon proposes Korean `Rosetta plan` to create youth jobs

The presidential candidate of the main opposition Democratic Unity Party has pledged to require public organizations and large corporations to hire young job seekers as a certain percentage of their workforce to alleviate youth unemployment.

In a book of election pledges he released Nov. 11, Moon Jae-in said that if elected, he will require state-funded organizations and large companies with 300 or more employees to hire enough people age 29 or younger to the point that the latter comprise at least 3 percent of an entity`s full-time workforce. Public organizations and companies that do not follow the regulation, he added, will be required to pay “employment contributions” for use as incentives to businesses that hire many young people.

The plan is similar to Belgium’s “Rosetta Plan.” Faced with high youth unemployment in the late 1990s, Brussels in April 2000 passed a law requiring companies with at least 50 staff to recruit young people so that the latter comprise at least 3 percent of their work force. Companies that failed to meet the quota faced fines. The program was named after “Rosetta,” a film about a teenage girl earning low wages without hope for a better future.

As a result, the European country`s youth unemployment fell to 15.2 percent in 2000 from 22.6 percent the previous year, as the plan created 50,000 jobs. The rate, however, jumped back up to 21.8 percent in 2003 and 22.4 percent in 2010, nearly the same level as in 1999. Thus the plan worked over the short term but failed to fundamentally tackle youth unemployment.

Byeon Yang-gyu, head of macroeconomic research at the pro-business Korea Economic Research Institute, said, “Belgium tried to force young people with low education to get jobs,” adding, “As a result, many low-quality jobs were created. Considering Korea’s abundance of highly educated but unemployed young people, such a plan will likely negatively affect those with less education.”

ryu@donga.com