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Spend it like Schroder

June 06,2017
The 11.2 trillion won ($9.9 billion) supplementary budget proposed by Moon Jae-in’s administration on Monday reminds us of the labor reforms pushed by former German Chancellor Gerhard Schröder.

Schröder succeeded in rejuvenating the ailing German economy, once dubbed the “sick man of Europe,” through his relentless push for labor reform in the early 2000s. Despite intrinsic limitations stemming from his Social Democratic Party, he successfully put the German economy back on track after demanding workers share the pain with companies. As a result of his adventurous move, Schröder lost his seat to Angela Merkel of the Christian Democratic Union in 2005.

But we can hardly find the remarkable feature of Schröder’s reforms in our government’s aggressive drive to increase the number of civil servants to tackle our high unemployment rate. The liberal government must listen to criticism that it also follows in the footsteps of past administrations that rolled up their sleeves to better the economy through hefty government spending.

The Democratic Party is expending all effort to get the extraordinary budget passed in the National Assembly, given its significance to the administration’s top agenda items including job creation and income-driven growth. Yet the government is not offering sufficient answers to growing suspicion about the feasibility of Moon’s campaign promise to create 810,000 jobs in the public sector.

Let’s set aside tricky questions like whether the proposed budget meets conditions for the money it’s spending or whether the measure is appropriate given the economy has begun to show signs of a rebound. The public still has doubts about whether the special budget will really help the private sector hire more employees as the administration hopes or if the stopgap measure of hiring 810,000 civil servants will result in more fiscal burden on the government.

After looking into the budget’s details, we are increasingly concerned because there are more unspecified items of spending than initially expected. The government must keep a close watch on spending so as not to waste it or use it for populist projects like in the past. The government even plans to allot more money to a ministry that creates more jobs than others.

Moreover, the budget directly related to job creation only takes up less than half of the 11.2 trillion won. The rest of the money has been allocated to building infrastructure and increasing welfare benefits. The government must be careful in spending the money.

JoongAng Ilbo, June 6, Page 26