Finance minister, Moon’s policy chief butt headsKorea’s chief economic policymaker and President Moon Jae-in’s top policy adviser are at odds again over the administration’s income-led growth strategy.
During a government and ruling party meeting on Sunday, Finance Minister Kim Dong-yeon hinted at the need to redirect the Moon government’s economic policy.
“If it is needed, we will consider either improving or making changes [to past economic policies] in working with related departments,” Kim said during the meeting. “We would have to review the effects of the economic policies that have been implemented.”
The finance minister said the government accepted recent job reports and takes responsibility for the current situation. However, Blue House senior policy adviser Jang Ha-sung asked the public to trust the government and be patient, though he apologized for last month’s disappointing job figures.
“Once the restructuring in certain industries stabilizes, the job situation will improve,” Jang said. “I am confident that when the government’s income-led growth, innovative growth and fair economy policies start showing effects, our economy will gain vitality while sustainability will go up, and lower and middle-income [households] will feel the outcome. This will improve the job situation.”
The former economics professor said the Korean economy has a flawed structure where the benefits of economic growth don’t reach the middle and lower classes or small business owners, which he said was the reason that jobs figures have worsened.
Jang’s view is that the economic policies introduced by the Moon government are long-term changes and they shouldn’t be judged by short-term results.
On Friday, Statistics Korea released a disappointing job report that said only 5,000 jobs were added in July compared to a year ago. It was the lowest number of new jobs added in eight and half years. It was the worst hiring figure since January 2010, when 10,000 jobs were lost compared to the previous year.
The disappointing jobs figure alarmed the government and forced the finance minister to cancel his day off on Friday to hold an emergency government meeting and set up a meeting with ruling party lawmakers on Sunday.
The meeting was attended by Kim Young-joo, the Minister of Employment and Labor; Paik Un-gyu, the Minister of Trade, Industry and Energy; Hong Jong-hak, the Minister of SMEs and Startups; Yoon Jong-won, the president’s senior secretary for economic affairs; and Jung Tae-ho, senior secretary for job creation. The ruling Democratic Party’s National Assembly floor leader Hong Young-pyo and Kim Tae-nyeon, the party’s policy chief, also participated in the meeting.
This is not the first time that Finance Minister Kim and the Blue House’s top adviser, Jang, have clashed over the impact that income-led growth has had on the job market.
Concerns first were raised when only 100,000 jobs were created in February compared to the previous year. This was first seen as a temporary decline. But in the months that followed, subsequent jobs reports were similar. They were a stark contrast to last year, when over 300,000 jobs were added every month on average.
Increases to the minimum wage, which grew by more than 16 percent this year, the sharpest increase since 2001, are a key element of the income-led growth policy. Concerns about the wage hike’s impact on the shrinking job market are growing.
Kim raised the need to look into whether the minimum wage was increased by too much. In May, Jang denied that the minimum wage had a negative impact on hiring.
“If you look at [the job situation], overall there was clearly no effect of job reduction [but rather] there was a clear increase in consumer spending,” Jang said during a meeting of the government and the ruling party at the Prime Minister’s residence. “Until March, at least, many research institutes that analyze job statistics found that excluding the food and beverage industry, there were no job reductions in the manufacturing industry.”
However, according to Statistics Korea, jobs in the manufacturing industry have been falling for four consecutive months, with 127,000 jobs lost last month alone.
The main opposition Liberty Korea Party has been attacking Moon’s economic policies since worrying jobs reports started to be released.
Yoon Young-seok, the spokesman for the conservative party, said Friday that the country’s current economic problems are because of the Moon government’s income-led growth policy.
BY LEE HO-JEONG [firstname.lastname@example.org]