Reform must continue
National debt reached 1,211.2 trillion won ($1,107 billion) last year, up 93.3 trillion won from 2013. Over half of it - 47.3 trillion won - was spent covering up for losses in the separate pension systems for government employees and retired soldiers. If pensions for public employees are not fixed, about 8 billion won worth of taxpayers’ money will be lost in the programs each day.
The delay in labor sector reform poses another danger to the economy. The tripartite negotiation framework is under jeopardy after Kim Dae-hwan, chairman of the Economic and Social Development Commission, stepped down and the Korea Federation of Trade Unions walked out of the talks that failed to produce an agreement by the March 31 deadline. Korea’s employment rate among those in their 20s could be stuck in the 10 percent range - similar to the troubled economies of Spain and Italy - if labor reforms are further delayed.
The Bank of Korea estimates that the economy will grow at just 3.1 percent this year and inflation at 0.9 percent. Only structural reforms can save an economy mired in lethargic growth and deflation. Regardless of the bombshell graft scandal, a national reform agenda, which involves the government employees’ pension and the labor market must proceed.
The government and the ruling party must be open to a thorough investigation into the bribery scandal that involves top members of the administration and the ruling party that played a key role in Park’s election campaigns. Saenuri Party head Kim Moo-sung called for a fair and independent probe, but said the scandal should not interfere with other agendas. But the government cannot run properly as long as key administration and party members are suspected of receiving huge political funds from a businessman.
Government agendas and affairs should not give them an excuse to weasel out of this conundrum. If the administration and party do not deal with the problem truthfully, President Park Geun-hye won’t be able to see through her agenda over the remaining two years of her tenure and the Saenuri Party will be bound to lose in the April by-elections, as well as the general elections next year.
The role of the New Politics Alliance for Democracy is also important. The main opposition should pressure the government to investigate the case and cooperate in the areas of reform in the labor market and government employees’ pensions so that the political mess does not interfere with much-needed reforms and provides traction to the slow-moving economy. JoongAng Ilbo, April 13, Page 30