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Piercing the economic gloom

Dec 12,2018
Korea Inc. is depressed as the countdown to New Year’s Eve kicks off. According to a recent survey by the Korea Employers Federation (KEF), more than half of local companies said they will downsize their management plans for 2019. Less than 20 percent said they will expand their businesses, while 30 percent said they will maintain the status quo.

Our corporate leaders are increasingly losing confidence due to a hostile domestic environment — including rapid rises in the minimum wage, a sharp reduction of the workweek to 52 hours and the Bank of Korea’s benchmark rate hike — along with deteriorating external factors — including the ongoing Sino-U.S. trade war. Such challenges, both at home and abroad, pose a serious threat to small- and mid-sized companies in particular as they have to downscale their investments and save labor costs to survive.

Despite such gloomy economic prospects, the government shows no interest in devising effective measures to revitalize our economy. In the KEF survey, a whopping 71 percent replied that they have trouble running their companies as a result of the drastic cut in the workweek. Lawmakers have come up with the idea of extending so-called flextime — which allows companies to vary maximum working hours depending on the work needed at a given time — to at least six months from the current three months.

But discussions on the issue have gone nowhere. President Moon Jae-in and floor leaders of the ruling and opposition parties promised to address the issue within the year. But it was handed to the Economic, Social and Labor Council for further discussions in the face of vehement opposition from unions. Hong Young-pyo, floor leader of the ruling Democratic Party, vowed to put the revision to a vote in a special session of the National Assembly. After the grace period for enforcing the law ends this month, a considerable number of companies could face criminal charges.

In Tuesday’s cabinet meeting, Moon underscored that the government cannot achieve the “inclusive growth” he has been championing if it fails to resolve the difficulties of self-employed and mom-and-pop shop owners. But if he ignores the simple fact that their troubles resulted from his government’s wrong policies, he will never find solutions. New Prime Minister for the Economy Hong Nam-ki pledged to moderate the administration’s income-led growth policy: he must back that up with concrete actions.

JoongAng Ilbo, Dec. 12, Page 34