On Dec. 17, 2018, President Moon Jae-in had an expanded meeting with the economy-related ministers of his government to re-invigorate the somewhat sagging economy.
President Moon enumerated a good number of accomplishments his government has attained in the economic sector but he also shed light on the areas where he saw improvement was in order.
However, there have been some different opinions from the economic experts on the policies of the Moon government.
One example is the assertion made by Professor Yang Joon-mo (economics) of Yonsei University in Seoul who presented his views on the current economic situation in Korea in his disclosures made at Newspim in Seoul on Dec. 12, 2018.
Professor Yang said that the economic policies of the government of President Moon appear to be of an ‘exploitive nature’ obviously against the interest of the business people. (See excerpts from his assertion toward the end of this article.)
Excerpts from the remarks of President Moon Jae-in on the Korean economy:
Today, we are gathered to discuss the direction for next year’s economic policy. I hope this meeting will serve as a chance to look back at our economy and the people’s livelihood this past year and share next year’s economic policy direction and goals.
This was the first year my Administration pushed for a “people-centered economy” in earnest. Significant changes have begun in many different areas.
With overall wages and household incomes on the rise, we have worked to help decrease living costs associated with healthcare, childcare, telecommunications and other expenses and laid the groundwork for income-driven growth by expanding the social safety to include, for example, a basic pension plan.
The number of startups has grown steadily and venture investments have soared, pointing to the beginning of moves for innovative growth in the private sector. The penetration of electric cars and hydrogen vehicles as well as renewable energy has greatly increased, raising high expectations for future growth engines.
Our pursuit of a fair economy has greatly diminished unfair trade practices and nearly settled the issue of conglomerates’ cross-shareholdings. We have taken the first step toward overcoming the structural problems of our economy.
There have been positive signs from macroeconomic indicators in terms of the scale of exports, per capita income and fiscal health.
However, there are many people who cannot sense the benefits of these accomplishments. That is because their lives have not been improving at an even level.
Equitable improvements in the quality of life require the creation of more decent jobs and the resolution of difficulties facing low-income families, microbusiness owners and the self-employed. Also needed are industrial policies to identify new industries and new growth engines as well as to enhance the competitiveness of conventional industries such as automobiles and shipbuilding.
To build an innovative, inclusive state, economic vitality should be raised through deregulation and more vibrant investments and, at the same time, policies should be focused on balanced national development and the revitalization of local economies.
The budget for 2019 has been finalized. It is the greatest in history at 470 trillion won. As the first budget fully reflecting my Administration’s determination, it contains the governing philosophy of an inclusive state where everyone prospers together.
Revitalizing the economy is the main focus with the industry-related budget having been increased the most, and expenditures to enhance inclusiveness expanded to improve the people's daily lives, welfare and quality of life.
Next year, the Government's economic achievements need to be presented to the public. It would be impossible to dramatically change the economy within a five-year term. Still, the Government has to give the people at least the confidence and expectations that its economic policy is going in the right direction, bearing fruit.
To reinvigorate the economy, both the public and private sectors have to expand investments and new business opportunities should swell to trigger a startup boom. The business conditions of the self-employed and microbusiness owners need to be improved through increased consumption.
Instead of just waiting, the Government has to take the first step to identify and address impediments to corporate investments.
Besides comprehensive deregulation, attention has to be paid to difficulties related to individual and product-specific investment cases. Through the innovative startup fund, enhanced assistance has to be channeled into starting businesses that can help pioneer new industries and markets. The record-high R&D budget of 20 trillion won has to be intensively invested in ways that expand future growth engines.
In addition, the Government and the public sector need to be the first to purchase new products from new industries, thus helping create a new market in the initial stage.
With regard to stabilizing the people’s everyday lives and safety, yet another important task is to enhance inclusiveness, especially for the vulnerable in society.
Countermeasures aimed at supporting the self-employed and microbusiness owners have to be implemented without setbacks, for instance, by lowering credit card fees and safeguarding the rights of leaseholders. Customized assistance is needed for those who find it challenging to land a job, including young people, the elderly, people with disabilities and women. The social safety net has to be strengthened for those who are marginalized in employment.
The recent KTX derailment and hot-water pipe rupture, as well as the accident in the thermal power plant in Taean-gun County in particular that caused the unfortunate death of a subcontractor’s employee, have again made us more aware of the fact that public interest and safety need to be prioritized over efficiency in managing state-owned corporations. I urge you to make more efforts to grant regular worker status to non-regular workers in the public sector and, especially, to prevent the outsourcing of hazardous and safety-related jobs.
Expanding investment in housing and medical services, increasing infrastructure related to daily life and easing key living cost burdens are essential undertakings to improve the quality of life. I ask you to respond with more sensitivity to the voices of those in need who appeal for help with their hardships.
For new economic policies such as raising the minimum wage and reducing working hours, the most important thing is to pursue them in a manner that is well understood by the public by weighing both economic and social acceptability and the positions of various stakeholders.
If necessary, complementary measures also need to be sought at the same time. I urge the Economic, Social and Labor Council to play a leading role in actively seeking social dialogue and compromise.
In this discussion of the direction for economic policy, it is significant to select 16 main tasks in four areas: large projects, social compromises, industrial innovation and inclusive policies. I ask the members of the economic policy team to unite as one and resolve to do your utmost to achieve results without fail at least in implementing the 16 main tasks.
We are now transforming the fundamentals of economic policy. Controversies and doubts could arise in the process of implementation. The proper attitude requires patience and determination to bear fruit.
Even with a change in administrations, the value of inclusiveness is a top priority that cannot be switched. I hope that you will have confidence in an inclusive state in which everyone prospers together. It can undoubtedly succeed and is something that has to succeed. Only when we push the policy forward with conviction will the people’s anxiety be eased.
It is my wish that the economic policy direction for 2019 can bring the people hope.
Excerpts from of the critical view of the Korean economy by Professor Yang:
The policies of the government of exploitive nature include (1) the raising of the minimum wages, (2) lowering of the credit card handling fees, (3) increase of the real estate tax, and (4) enforcement of public management of kindergartens.
Prof. Yang said, “The raise of the amount of minimum wages, which are intended to increase the income of the workers, ultimately brought about the collapse of the small businesses and reduction of jobs.”
Then he said, “Reduction of the card-handling fees also reduced the benefits of the consumers and brought about the curtailing of the sales of the small businesses.” Here are his views on other areas:
The government approaches to raise the real estate taxes and carry out the public management of the kindergartens are also wrong. Apart from the original intention of the measures, the results came in the form of exploitation, which raise a question, “For whom were made the policies?”
The national security situation is changing and competition is becoming keener everyday in the area of trade, technology and human resources development and acquisition. Against this backdrop, the government policies appear to be those of children.
The government is destroying the economic resources and turning over the burden of the outcome to the future generation.
The national security measures are being torn down but there are no alternatives or countermeasures.
Against the backdrop of collapsing national security measures, there are no viable diplomatic strategies nor are there any effective industrial policies.
The labor-management relations on the aggravation course and external shocks are also increasing, but the government has no affective measures to deal with the situations.
These conditions bring ill effects to the real economy and ultimately adversely affect the livelihood of the people.
In particular, the budget bill, which is expected to substantially increase the tax burden on the people, has been passed obviously to the regret of many people who are worried about tax hikes.
If this type of situation is permitted to continue, our future generations are expected to face a gloomy reality.
In order to improve the situation, the growth-oriented policy and the welfare policy should be handled separately from each other.
The economic growth policy and the welfare policy should not be mixed with each other lest an economic crisis could come as a result.