It’s time for integral growthOur society is faced with a serious challenge and crisis. This year marks 30 years since Korea established a democratic system of direct presidential elections and 20 years since it suffered a financial crisis leading up to a humiliating international bailout.
Sustainable growth is at risk and justice in a democratic society that should ensure fairness in opportunities and social mobility is being questioned.
On a macro level, growth and distribution, large and small enterprises, exports and imports are imbalanced, and a benign cycle driving a society and economy across the generation has become dysfunctional. On a micro level, slow growth, industrial restructuring, polarization, household debt, real estate, youth unemployment and worsening fiscal integrity add complexities to the economy.
There must be a dramatic push for the Korean economy to rise above these challenges. The economy must be reset this year. The starting point would be changes in politicians and government so they can work together to aid the economy. Government control and reckless political interference aggravates risks and uncertainties in the economy.
Politicians and government must defend the economy against risks and uncertainties through coordinated policy-making. The public sector also should cooperate with the private sector to remove or share the work of easing micro challenges and boosting corporate investment, consumer spending, and income and job security.
Second, the sectarian social and economic system must be reformed. The country cannot elevate to a new level in growth potential and national competitiveness without retooling toward the future. Industrial reorganization in the aggressive manner to strengthen the ICT sector to top global standards has been null over the last two decades.
The hardware industry must be reinforced through industrial reform to meet the new challenges of a rapidly changing technology scene. The system on soft powers also requires fundamental changes through reform in education, labor, finance, welfare and system.
The demographic risks from a low birth rate and an aging society and fourth industrial revolution would bring about radical changes to human resources, the job market and lifestyles. The education entirely tuned to send children to universities should be changed to foster creative talent and technology, and society must draw young people into venture start-ups. Society almost must be more engaging toward the underprivileged and fixing inequalities.
The fourth industrial revolution would bring about proliferation in automation backed by artificial intelligence and big data. The job market would undergo a dramatic change. The labor structure must be overhauled to ensure greater flexibility. Korea is most lagging in labor reform and flexibility. Without preemptive action, inequalities would grow due to competition over scarcer jobs. Reforms in system and regulations are essential to protect jobs in automated society.
Third, the economy must be able to run in benign cycle based on balanced growth model. There must be a new perspective on growth as slow-moving structures are expected to become lengthy fixtures. Governments around the world have revitalized their fiscal and monetary policies since the 2007-2008 financial crisis, but have failed to speed up the global economy. The economy cannot pull out of the slump entirely through government stimulus packages. What weighs down the economy are widening disparities in income and opportunities.
Growth should be stemming from quality improvement. The economic spectrum should widen to the social and cultural realm. Growth should be sought through social integration and positive social and cultural energy. Fair opportunities and competition must become more available to diverse classes. More people should be able to contribute to the energy powering growth. The society must ensure social mobility and equal distribution of fruits from growth.
Ireland has set an example for social integration and sustainable growth through social partnership in 1987; the Dutch through Wassenaar Agreement among employers and labor unions in 1982 and Germans through Hartz reforms in 2003. Fairness in opportunities and economy can ease social divide and polarization. Economic policy, reforms in the social system, and a growth model pursuing social integration are tasks for the economy this year to set it on the path for solid and balanced growth.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, Jan. 6, Page 29
*The author is the chairman of the National Research Council for Economics, Humanities, and Social Sciences.