Services need deregulationMost voters who went to the polls in the Bundang by-election last week earn their living in the service sector. They turned against the government because its boasting of 6 percent economic growth offered them little returns or comfort. The service industry no longer can be considered just an economic issue - it poses political ramifications that the government must address for the sake of the country’s future.
The service sector accounts for 66 percent of the country’s working population. It represents 54 percent of gross domestic product. The economy cannot grow evenly without tending to the service industry. Employment and consumer confidence have not picked up because the service sector remains sluggish and underdeveloped. Gone are the days when the economy can depend on the manufacturing and construction sectors for new jobs.
The local service industry is structurally crippled. Traditional areas like wholesale, retail, food and lodging services still take up an asymmetrically large portion of the economy in contrast to advanced markets where valued-added IT, financial and intellectual services fields - like legal or accounting - make up a greater share. Restructuring and deregulating have made little progress due to conflicts of interest and political and social disputes.
What offers hope are the medical and cultural content services areas. Foreign patients seeking local medical care and exports of cultural products have been surging. With more openness and competitiveness, the two fields can turn into cash cows for the country. The IT service sector, once the source of national pride, has been faltering. Local social networking platforms like Iloveschool and Cyworld have been shunned for Facebook.
The economy can only run without a hitch on the twin engines of the manufacturing and service industries. Such balanced growth is more urgent than the symbiotic growth of large and small companies.
The service sector can generate solid jobs, and income growth can lead to improved confidence and spending. It is also the solution to better care for the common people and their welfare.
The government’s endeavors to advance the service sector have hit a bottleneck every time because of conflicts of interest among related industries. We must create world-class corporate brands and success stories in the service sector. In order to do so, authorities must implement radical deregulation and market opening.