Excessive Intervention
It has been pointed out that the Moon Jae-in government is intervening to a considerable extent in the private sector of the economy. At present, the South Korean government is intervening in pricing, employment and so on by, for example, trying to turn temporary workers into permanent workers, raise the minimum hourly wage to 10,000 won and remove merit-based salaries.
The Ministry of Strategy & Finance of South Korea held a meeting on June 16 and decided to allow public institutions to adopt merit-based salaries only when they want to and allow those that already adopted the pay system to cancel their adoption if they want to. In the public sector of the country, the pay system was introduced one year ago by the Park Geun-hye administration and institutions refusing to accept it have been subject to disadvantages.
The institutions are not particularly welcoming the new measure as such a sudden and frequent change in policy is likely to lead to a significant confusion. These days, they are racking their brains over how to provide regular employment for their temporary workers as this is the very issue the President mentioned upon taking office. “We also agree that more decent jobs should be created, but the conversion is something that cannot be done overnight,” said one of them.
A similar situation is happening concerning the minimum hourly wage, too. The government held a meeting on June 15 with regard to this issue but those from the business community failed to clarify their stance during the meeting as the government officials participating in it reiterated their ideal without taking into account the social repercussions that can be entailed.
The government’s intervention in pricing in different markets is causing controversies as well. For example, it is currently persuading local mobile carriers not to collect base fees and LG U+, in response, is looking to impose no base fee on feature phone users. Meanwhile, the government is not lowering the quasi-taxes imposed on the mobile carriers such as spectrum fees. Last year, SK Telecom, KT and LG U+ paid 119.2 billion won, 70 billion won and 50.2 billion won in spectrum fee, respectively. “As is well known, prices are supposed to be determined by markets themselves, and it seems inappropriate for the government to try to control them,” said an industry source.