A flawed prescription

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A flawed prescription

The latest survey on household income by Statistics Korea underscored fundamental flaws in the Moon Jae-in administration’s income-led growth policy. The monthly income of the bottom 10 percent of households nationwide averaged 841,203 won ($781) in the first quarter, down 12.2 percent, or 117,368 won, from a year ago.

This fall is the biggest since data started being tracked in 2003. Their income decreased largely because of a 35.6 percent plunge in labor wages, which fell from 247,012 won to 159,034 won. Meanwhile, income for the highest 10-percent income bracket increased by 10.7 percent, or 1,225,064 won, from last year.

The government’s so-called pro-labor policies have hurt the country’s lowest income bracket. Self-employed workers and shop owners have reduced hiring after the government-mandated 16.4 percent increase in the minimum wage went into effect earlier this year. As a result, many of the jobs that most of those in the bottom income bracket rely on have been lost. Over 90,000 jobs were cut in the wholesale, retail, dining and lodging industries last month.

The antimarket experiment — which will raise the hourly minimum wage to 10,000 won in three years, convert contract workers to permanent employees and hire 810,000 more workers in the public sector — is seriously hurting the weakest areas.

Experts from the progressive government of Roh Moo-hyun are also expressing concerns over the policy. Lee Jeong-woo, who had been the policy chief for the Roh administration, likened the job situation to a cart leading a horse. Kim Byung-joon, an honorary professor at Kookmin University, also criticized the Moon administration for turning a blind eye to the dangers and traps in its policy. The government must undo its error and normalize the economy by letting the horse (employers) pull the cart, through increased investment and hiring that will lessen the pain of the poor.

JoongAng Ilbo, May 28, Page 30
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