LUXEMBOURG -- Democracy everywhere increasingly involves politicians seeking short-run gains for themselves and small interest-groups while imposing large costs on most of the population. This trend toward cynical, zero-sum games is most evident in South Korea when it comes to the labor market. It is commonplace for populism to be allowed to overwhelm common sense, economic rationality and majority interests.
A recent announcement by the Roh Moo Hyun administration indicates that it will require irregular and part-time workers in the public sector to be moved onto regular payrolls. By making South Korea's labor market more rigid and inflexible than it is now, the country will become less attractive to foreigner investors as it pushes domestic firms offshore.
And so it is likely that the economy will be deflected away from its long-term growth path so that fewer new jobs will be created. As always with such misguided policy decisions, the weakest individuals in the labor market, new entrants and those with the least skills, will be harmed the most. As elsewhere, excessive wage rates will reduce output while raising unemployment rates.