It previously set a jobless rate of around 3.5 percent in 2010 after losing 72,000 jobs last year. "We need growth with employment and get rid of the belief that economic growth will automatically create jobs. So we need to shift the policy paradigm to focus on creating jobs as well as on growth in the future economic management," Finance Minister Yoon Jeung-hyun told reporters.
His ministry said in a statement the government would reform industrial policies and introduce fiscal measures to stimulate employment, including tax incentives for companies planning to hire or relocating overseas businesses back to South Korea. The government has repeatedly warned that Asia's fourth biggest economy, even if it is recovering quicker than most, is not yet on a sure footing and has piled heavy pressure on the central bank to keep interest rates at their record low.
Growth is seen as having slowed in the fourth quarter last year as the government eases back on stimulus measures. But an official with the central bank, which argues that a small interest rate hike does not mean an end to easy monetary policy, told Reuters that the slowdown did not suggest the recovery momentum had waned. To meet the jobs target, the government will expand a subsidised internship programme for companies. Provincial governments will also be instructed to cut costs and use the savings to create an additional 30,000 jobs.