Wise words from Schroder

At the Jeju Forum, former German Chancellor Gerhardt Schroder on Thursday emphatically stated that political leaders must bear the risk of defeat in elections. Asked whether he regretted his election defeat after pushing for Agenda 2010 - which focused on reforming pension programs and the labor market - he said it was crucial to prioritize national interests over politics. Schroder came into the spotlight at the forum, cosponsored by the JoongAng Ilbo, Jeju Special Self-governing Province, the International Peace Foundation and the East Asia Foundation, for his dramatic role in rejuvenating the lethargic post-unification German economy through his bold push for structural reform.

Schroder consistently emphasized the need for reforms. In a talk with Kwon Young-se, the former ambassador to China, he said that it would be too late if the Korean government waited to kick off structural reform until after unification. His advice carries significance because we recently failed to strike a grand consensus among labor, management and the government on labor reforms, not to mention stalled civil servant pension reform.

The first lesson is that our politicians must not push reforms merely for political gain. When Schroder moved for an overhaul in 2003, Germany was known as “the sick man of Europe.” He pushed reforms to raise labor’s flexibility, cut welfare expenditures and raise the age for pension payments from 65 to 67. He expanded government support for young job seekers and cut income taxes. Despite a sweeping financial crisis in Europe, Germany stood firm, and its youth unemployment rate is now at the lowest level among nations in the Organization for Economic Cooperation and Development (OECD). Schroder’s martyr-like reform campaign offers priceless lessons for our political circle. If they would only uncover their ears.

Second, the government must demonstrate leadership in reforms if a consensus cannot be reached among related parties. Schroder’s efforts to raise the flexibility of labor invited vehement opposition from workers, while his introduction of minimum wages triggered strong resistance from companies - his government failed to receive concessions from either. So he concluded his drive through a government-led campaign. Korea’s government must also be ready to forward a Plan B.

Third, the sooner the better. A unified Germany had to suffer through the serious after-effects of unification. Schroder advises Korea to launch economic and societal reform now to prepare for unification. We must take his lessons to heart.

JoongAng Ilbo, May 22, Page 34