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Stubborn on the economy (KOR)

May 09,2019
The economic scorecard for the Moon Jae-in administration for the past two years is extremely poor. Analysts even call it a “quintuple slump” on employment, investments, exports, production and consumption. Employment, in particular, has reached a disastrous level, as seen in the worst-ever jobless rate for the young generation. Jobs for people in their 30s and 40s — the backbone of our economy — continue to decline. Jobs for those in their 60s and above are being created by people’s tax money, but they are anything but quality jobs. While income polarization is deepening despite the government’s vow to address it, the self-employed are crying for help.

All of that has led to a slowdown in the growth of our economy. International analysts are hurriedly lowering their estimates for Korea’s growth for this year — as seen in ING’s 1.5 percent and Nomura Securities and Capital Economics’ 1.8 percent — as a result of lethargic investment. Facilities investment was cut by 11 percent in the first quarter.

Deputy Prime Minister for the Economy Hong Nam-ki attributed these bad indications to “worse-than-expected conditions of the global economy.” Amid weak spots in the world, however, China’s economy grew by 6.4 percent in the first quarter compared to the same period last year. The United States is enjoying a boom unseen in the last half a century. The Korean economy’s relative weakness most likely resulted from non-external factors.

The government’s reckless income-led growth policy, pro-labor policies and lack of determination to deregulate are the real culprits. Rapid hikes in the minimum wage cost jobs. The government has been overly submissive to the demands of the militant Korean Confederation of Trade Unions. As a result, GM Korea shut down its Gunsan factory and Renault Samsung’s Busan factory is suffering labor problems and reduced production. Despite many people’s pleas for change, the government is defiant.

The U.S. economy is enjoying a boom thanks to the Donald Trump administration’s slashing of corporate tax and easing of regulations. The Wall Street Journal described an awakening of “animal spirits” by the government. Korean enterprises slumber due to stifling regulations. After suffering from high wages and labor discord, they move to foreign countries. Even small- and medium-sized companies are joining the exodus. It is not the time for President Moon to cling to his weird economic experiment to achieve growth through wage increases. He must change course before it is too late.

JoongAng Ilbo, May 9, Page 30