[EDITORIALS]Open up Korea’s service sectorThe government has announced plans to make Korea’s service sector more competitive. These include lowering the barriers to entry in 27 fields, such as finance, accounting, the law, medicine and design, as well as gradually allowing “for-profit” hospitals. It is good that the government, however belatedly, has decided to move in the right direction. The service sector is at a juncture that requires massive deregulation and the opening of markets.
As of last year, the service sector accounted for 65 percent of the nation’s jobs. The increasingly high-tech manufacturing sector can no longer create jobs. There is no better way to create jobs, or to revive the economy, than to nurture the service sector.
To date, Korea’s service sector has been treated like a delicate plant in a greenhouse. Policymakers, facing pressure from doctors, lawyers and teachers, dared not push to open up those fields.
According to the state-run Korea Development Institute, labor productivity in Korea’s industrial sector is only 35 percent that of America’s. Yet productivity in Korea’s service sector is only 65 percent that of Korea’s industrial sector. A closed system has produced a weak service sector, and the country is paying the price.
A total of $12 billion flowed out of Korea last year for spending on education, medical services and travel overseas, including golf trips. Thus did hard-earned export income flow back across our borders. Had that money stayed in the country, according to one estimate, it would have contributed to the creation of 320,000 new jobs.
In a recent report titled “Economic Policy Reforms: Going for Growth,” the Organization for Economic Cooperation and Development recommended that Korea further deregulate and boldly open up its service sector. This was recommended not merely as a way to stimulate the economy, but as a reminder that through fierce competition, everyone in a society benefits from good services at an affordable price.
Those now working in the service sector should not fear more competition. The doors to the home appliance industry were flung open in the early 1990s, and Samsung and LG have become world leaders. Since the full opening of the distribution industry in 1997, Korean companies have outdone foreign rivals in export to China. This is no time to hesitate about opening the service sector for fear of a backlash from interest groups.