Revitalize the economy

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Revitalize the economy

Richard Dobbs, a director at the McKinsey Global Institute, recently warned that the Korean economy is like a frog in a pot of slowly boiling water, warning of a serious crisis. Referring to the argument, some claimed that a substitute holiday system is nonsense for Korea. Does Dobbs really mean what some inferred from his remarks? He has also claimed that Korea won’t be able to end its cycle of low growth if it maintains the current economy driven by exports to the United States and Europe. To escape the dilemma, Korea must come up with a strategy to boost the service industry. I want to stress that the substitute holiday system will encourage domestic consumption and strengthen the service industry to create an effective stepping stone for the economy’s stable growth.

As of now, the economy slowed down because of the weakened momentum of domestic consumption, and economic policies must focus on boosting domestic consumption. If we just increase production to revive the economy, companies will only have increased stockpiles of goods, adding burden to the national economy. It is the ultimate truth that supply and demand must work together to support the growth of an economy through smooth circulation of a macroeconomic model.

Therefore, more opportunities should be provided to people to spend more and engage in more leisure activities through the substitute holiday policy. It could create effective demand in the manufacturing and service industries. When the cash flow of a economy moves smoothly, sales will grow, and there will be more reasons to increase production. The company will, then, create more jobs and eventually increase the national income.

There are already successful examples in France and the United States which overcame the Great Depression by increasing holidays and revitalizing the leisure industry. Japan and China also each introduced “Happy Monday” and “Golden Week” to boost the economy and create jobs. State-run research institutes and think tanks of conglomerates also admit the strong power of the substitute holiday system in boosting the economy and argued in favor of introducing the system. There are also statistics that the sales of a wholesale store can fluctuate about 6.6 percent to 10 percent due to an extra holiday.

Some protesters say that substitute holidays will lower incomes for temporary workers. That is, however, not an argument for the weaker class. It is rather an argument that will force the bottom class to keep its current living standards.

If they worry about the bottom class’ unstable life, a policy should be adopted to provide them opportunities to improve and stabilize their lives. Of the economically active population, 94 percent are working for the service industry, and 66 percent of manufacturing jobs are in the domestic consumption industries.

But since 2000, the government pushed forward export-driven policies, and the domestic consumption industry fell to comprise 65.4 percent of the economy, far lower than the 97 percent average in the OECD.

The link between economic growth and the increase of the national income has disappeared. When we change the paradigm of the economy by fueling domestic consumption and the service industry through the substitute holiday system, we will be able to provide opportunities to the weakest class.

It should also help with securing more jobs and encouraging economic growth that could eventually increase the national income.

Translation by Korea JoongAng Daily.

*The author is a researcher of the Korea Culture and Tourism Institute.

By Lee Sung-tae

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