Listen to the warningsThe Ministry of Strategy and Finance last week published an economic report on the achievements by the administration in its first year. The report said that the economy grew 3.1 percent last year against the previous year, recovering a pace of growth above 3 percent for the first time in three years. It also claimed the economic agendas to drive growth through increases in income and jobs, and policies ensuring fairness and promoting innovation were going smoothly. It concluded the measures have helped set the economy toward a new paradigm to benefit broad individual well-being instead of a restricted number of corporations and the rich.
State-invested think tank Korea Institute for Industrial Economics & Trade introduced an essay from Nobel prize-winning economist Joseph Stiglitz lauding so-called J-nomics — the economic policies under the President Moon Jae-in administration — as a “hopeful answer” to problems both advanced and emerging economies face. Regardless of the economist’s understanding of Korean economic conditions, it is a pity that the government has to borrow words from a Nobel laureate to advocate for its policies.
An economy is a living and evolving organism. The government’s economic policies must move in line with economic developments, making timely moderations and fixes in order to aid its course. Jang Ha-sung, the president’s policy chief, maintains that jobs have not decreased by the hike in minimum wage. But others think differently. Deputy Prime Minister for the Economy Kim Dong-yeon said, “From my experience and intuition, I believe the rise in minimum wage would have affected the job and wage conditions.”
Kim Kwang-doo, vice chairman of the National Economic Advisory Council, even feared the economy could be at the onset of a recession. Bank of Korea Governor Lee Ju-yeol shared the worries, saying, “The economic conditions are not optimistic given the domestic and external conditions.” Global markets have turned jittery about a major tantrum in the making in the emerging economies in June amid spread of currency volatility in Argentina, Turkey and Indonesia.
The government offered payouts from the state employment insurance fund to help companies troubled by shortened labor hours to survive. It is struggling to sustain jobs at risk from its policy experiments by covering them with fiscal money. J-nomics needs a re-examination for it to move forward.
JoongAng Sunday, May 19-20, Page 34