Who’s running the ship?While presiding over a meeting on Thursday to tackle Korea’s fiscal challenges, President Moon Jae-in emphatically said the government’s economic policy based on so-called income-led growth and increases in the minimum wage will not change.
He admitted some adverse side effects in the first quarter, such as a steep income drop for the bottom 20 percent of earners. Nevertheless, he emphasized that it was too early to reach the conclusion that such side effects stemmed from a failure of his policies.
Moon also blamed government officials for not successfully coping with conservative economists’ criticism of this year’s drastic minimum wage hike — a whopping 16.4 percent increase compared to last year. He claimed that positive effects accounted for 90 percent of the results and said government officials should be able to explain it confidently.
The president’s stern attitude about his administration’s economic direction is nothing new. In a Blue House meeting on Wednesday about household income, Moon sided with his policy chief, Jang Ha-sung, in a heated debate with Finance Minister Kim Dong-yeon. During the debate, Kim expressed deep concern about the adverse effects of rapid wage increases.
We are disappointed at Moon for brushing off an avalanche of complaints from businesses that are stressing the need for a moderate pace in wage increases.
At the same time, Moon instructed ministers to find ways to address the unexpected financial troubles faced by mom-and-pop stores. But who would frankly report the negative effects of the minimum wage hike to a president who steadfastly adheres to the positive effects?
Moon ordered officials from ministries dealing with the economy to accelerate his administration’s push for innovative growth after stressing its significance in generating new models for economic growth. His remarks could reflect his intention to calm deepening controversies over who really runs the ship on economic issues.
But the market can read his message in other ways. Business leaders will most likely interpret Moon’s remarks as some sort of “role division” among government officials: income-led growth, including minimum wage hikes, to his policy chief, for instance; economic democratization for the Fair Trade Commission; and deregulation and innovative growth for the finance minister. If control of our economy is fragmented in this way, who’s really running the ship?
JoongAng Ilbo, June 1, Page 30