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S. Korean Gov’t Applying Political Approach to Economic Issues
No Change in Policy Direction Despite Worsening Economic Data
S. Korean Gov’t Applying Political Approach to Economic Issues
  • By Jung Suk-yee
  • August 27, 2018, 10:47
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South Korean President Moon Jae-in is determined to pursue his income-led economic growth policy despite many negative economic figures and indexes coming out.

South Korean President Moon Jae-in said on August 25 that both the quantitative and qualitative sides of employment are improving in view of the number of employees, the employment rate, an increase in the number of full-time workers, and other data. He added that the government’s economic policy is on the right track, implying that his income-led growth policy will continue.

His tone was adamant. However, some experts pointed out that the President is trying to deal with employment and economic issues by mobilizing his supporters. They also claimed that the statistical data he mentioned was partially exaggerated.

“The number of full-time workers continued to increase for the past 10 years without exception, and the number of newly employed persons was larger during the past Lee Myung-bak and Park Geun-hye administrations,” said Sookmyung Women's University economics professor Shin Se-don. Specifically, the number of full-time workers increased by approximately 600,000 in 2011, 597,000 in 2013, and 300,000 after the election of the President. The employment rate showed a decline of 0.3 percentage points last month and the number of employees is on the decline. Nonetheless, the government said the economy is on the right track.

His current approval rating is 56%, the lowest since his day one. Opposition parties are bashing the government’s income-led growth policy with employment and income distribution conditions deteriorating. A former minister commented on August 26 that the President’s remarks are to deal with criticisms from conservatives by mobilizing supporters. The President mentioned the candlelight vigils in Gwanghwamun during his remarks, which were made to celebrate the national convention of the Democratic Party on August 25.

Another reason for the adherence to the policy is the President’s determination that there is no alternative to the policy in addressing the current income polarization. “During the past 10 years, the government asked large corporations to increase investment and employment by eliminating regulations, cutting taxes, and providing export incentives, yet they kept their earnings to themselves, blocking money from flowing to smaller companies and low-income households,” said a high-ranking presidential aide, adding, “This evidences an export-led economic structure and growth led by large corporations are no longer valid as a solution to income disparity.”

Still, it turned out that the government’s income-led growth policy has led to an employment shock and a widening income gap. Ordinary people’s living standards are showing no signs of improvement, yet the ruling party and the Cheong Wa Dae (Presidential Office) are still asking them to wait. The government is too optimistic, based on the current export and tax revenue statistics and an approval rating of over 50%, and is ignoring demands for a change in policy direction.

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