Bandages offer no cureThe government under acting president Hwang Kyo-ahn held a cabinet meeting concocting out measures to prop up the stubbornly lethargic private consumption. The measures include actions aimed to vitalize consumer sentiment, increase household income, and lessen tax burden. The keystone is to have Koreans travel and spend more domestically with extra time instead of going overseas.
It proposed incentives to employers that allow employees to work extra 30 minutes up to Thursday and let them off two hours earlier on Friday for a long weekend. Tickets for high-speed trains also would be halved if booked well in advance. The government also increased support for the low-income class and upped the cap for giveaways for buyers of wireless devices.
But in essence, there is nothing new or fundamental that could boost consumer sentiment or demand. The government has turned out many stimuli measures. It created supplementary budget every year. It cut sales tax for cars and promoted bargain sales in retailers across the country. It announced similar package in April last year and extended temporary holidays.
Consumption, however, worsened under the weight of deteriorating income, old age insecurity, and increased housing and education expenses. According to national statics data, real household income, after reflecting inflation, dwindled for five consecutive quarters until the third quarter of last year.
No matter what ingenious ways the government comes up with to promote spending, the working class simply has no money to spend.
Household debt has been refreshing all-time highs due to continued rises in housing prices and lack of supplies. The 30s and 40s hardly have any money left to save for their future.
Short-sighted measures are useless. The government must stop trying to pull up short-term data to congratulate itself on its policy achievements. The measures will only undermine fiscal integrity and future growth. The answers are laid out. There must be more radical and effective actions to stimulate births and address aging society. Housing and education systems must be overhauled to ease burden on households. Social welfare must be bolstered to lessen anxieties about old age. Bandages offer no cure.