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Logic over promises

Dec 04,2017
The ruling and opposition parties are in a fierce battle over the government’s mega-sized New Year’s budget amounting to 429 trillion won ($394.7 billion). But they are adhering to their interests regardless of the health of our state coffers. Case in point is their confrontation over increased basic pension and child care allowances. While the ruling Democratic Party takes the position of implementing them as early as possible, the main opposition Liberty Korea Party insists on delaying them, citing the possibility for the ruling party to take political advantage of them ahead of the June 13 local election.

A bigger problem comes from the Moon Jae-in administration’s plan to hire 174,000 civil servants over the next five years and raise the minimum wage with tax money. The government stresses the need to employ more workers given Korea’s higher youth joblessness and lower share of jobs in the public sector than in other OECD member countries. But experts worry that if civil servants increase, it naturally leads to more regulation, which would hamper the government from preparing for a fourth industrial revolution. Instead, deregulation can create more jobs than hiring more government workers, they contend.

The question is how to finance the alarming increase of civil servants. The National Assembly Budget Office estimates that a whopping 327 trillion won would be needed to hire 34,800 civil servants each year over the next five years. The office based its calculation on the assumption that a new civil worker works for 30 years and his or her salary increases three percent annually.

Nevertheless, the administration does not seem to know how much money would be needed — the Ministry of Strategy and Finance said it would take six months to calculate it. Does the government really try to push President Moon’s campaign promise even without taking the budget into account?

A minimum wage hike as steep as 16.4 percent annually does pose challenges because it backfires. After the wage rose sharply, beneficiaries are more worried than ever. Nine out of 10 mom-and-pop stores say they will lay off employees to save costs. Even large companies have to raise the salaries of their employees due to the government’s plan.

But the administration takes it a step further. It plans to subsidize the private sector’s minimum wage through its 3-trillion-won-plus budget. No other governments try to support minimum wages in the private sector through state coffers. Ruling and opposition parties must draw up a reasonable budget for next year before it’s too late.

JoongAng Ilbo, Dec. 4, Page 34