Time for action
Yoo Il-ho, nominee for deputy prime minister for the economy and finance minister, comes into office today beneath all the dark clouds hovering over the Korean economy. He faces such daunting challenges that they defy any comparison with his predecessors under the Park Geun-hye administration. As economic conditions have precipitously worsened since Park’s inauguration, the government’s policy means for financial and monetary prescriptions have nearly been exhausted. In the confirmation hearing, Yoo professed he would not deviate much from the current direction of the government’s economic policies.
The Korean economy is facing gloom in almost every direction. Some 64 percent of our young people are hired on contracts or in part-time jobs, while ordinary citizens have accumulated 1,200 trillion won ($990.6 billion) in household debt. Some of them can’t afford anything but debt servicing. The government lacks the 4 trillion won needed for state-subsidized day care for 3- to 5-year-olds due to a shortage of tax revenue that has everything to do with the corporate sector’s ever-weakening competitiveness.
A glimmer of hope can still be found in structural reforms, but only a glimmer. The government has so far failed to achieve structural reforms in labor, finances, education and other public sectors. Despite the government touting its civil servants pension reform, that can hardly help turn our low growth rate around. And hard fought reforms to the labor market are on the brink of collapse.
If the new minister wants full-fledged reform, he’s going to have to work overtime. His two predecessors’ policy goals were merely establishing a basic infrastructure for the economy to get out of the long tunnel of low growth. Revamping an economy cannot be achieved by deregulation alone. Yoo’s pledge to follow in his predecessors’ footsteps doesn’t inspire much confidence.
His predecessors lost a precious opportunity for Korea to join the Trans-Pacific Partnership, a trade agreement among 12 Pacific Rim countries. If the new minister follows in their footsteps too closely, it could lead him and Korea nowhere. Without powerful policy recipes and the capability to implement them, our economy will remain adrift.
Yoo’s new economic team must tackle tough challenges with determination. In such a dismal environment, powerful strategies are essential. Park’s presidential term expires in less than 2 years. Yoo must present strong action plans. The sooner the better.
JoongAng Ilbo, Jan. 13, Page 30