Stop the experiment

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Stop the experiment

President Moon Jae-in’s remarks on the positive effects of his administration’s so-called income-led growth and the government-mandated minimum wage hikes continue to fuel controversy. In a cabinet meeting Thursday discussing the nation’s fiscal challenges, Moon emphatically said that positive effects from his administration’s new economic approach accounted for 90 percent of the results in the first quarter. After controversy did not subside, Blue House spokesperson Kim Eui-kyeom on Monday explained that the president had clearly said the positive effects only applied to households with salaried incomes.

Spokesman Kim’s remarks are nearly a repetition of what Hong Jang-pyo, the presidential secretary for economic affairs, said earlier. Hong stated that Moon had based his positive assessment on earned income per capita, not per household. Therefore, the spokesperson only confirmed that there is no statistical error in what the president said. But public confusion is only deepening.

It all started with a critical mismatch between Moon’s positive remarks and the data that actually showed the incomes of the bottom 20 percent of earners dropped by 8 percent in the first quarter, the largest margin since the government began collecting such data. The public cannot dispel suspicions, because those in the lower income bracket actually lost jobs — and their incomes naturally decreased — due to a drastic rise in the minimum wage. Nevertheless, the Blue House insists on stressing the positive effects of income-driven growth.

The Blue House must stop its rosy interpretation of what really happened. Even when there is a need to do that particularly ahead of the June 13 local elections, the government must not distort statistics. The Korea Development Institute (KDI), a state-run think tank, also warned against dire repercussions from the novel experiment by the government based on hefty fiscal spending to boost the minimum wage. The KDI warned that if our minimum wage rises by 15 percent next year and another 15 percent in the following year, that will cause 96,000 people to lose their jobs in 2019 and 144,000 people to lose their job in 2020.

The think tank stressed that if the minimum wage hikes continue at the current pace, it will make it more difficult for laborers to find jobs, not to mention such adverse effects as a weakening of social mobility for people higher up the ladder and distortion of wage systems. That’s the bare face of Moon’s weird wage experiment. The Blue House must stop obfuscating immediately.

JoongAng Ilbo, June 5, Page 30
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