The cure for an ailing economyThe government has injected 54 trillion won (＄48 billion) to support jobs since last May, and yet the job front is more or less devastated. The amount could provide 54 million won to 1 million jobless people. But the money has gone wasted, given the pitiful state of the job market. The presidential office, government and ruling party held an emergency meeting over the weekend and agreed to increase spending for jobs by 12.6 percent from this year’s level.
Presidential policy chief Jang Ha-sung pleaded for more trust and patience in the government. But his optimism is a luxury.
The manufacturing sector shed 127,000 jobs last month as the country’s traditional mainstay industrial sites of shipbuilding and automaking have lost competitiveness. The hike in minimum wage and cutback in workweek hours have taken a heavy toll on precarious jobs and work that pays on an hourly basis. The minimum wage will go up by another 10.9 percent and the 52-hour workweek will be legally binding beginning in January.
The external front is equally challenging. Global commerce activities have been dampened by tit-for-tat tariff wars among big economies. The woes of debt-ridden Turkey and Argentina are spreading across emerging economies.
Some are already talking about a supplementary budget. But it is too late to stretch the budget when the National Assembly will soon have to review next year’s budget plan. Tax revenue is expected to exceed target, not because of increased income, but because the government set a conservative target this year in the first place. The government merely proposes to increase the budget without specifically setting the target on the spending. It must not improvise spending plans that could silently go down the drain.
There is a limit to covering the damages from policy failures with fiscal spending. The job front has weakened because the traditional manufacturing sector lost competitiveness and new industries are stifled under heavy regulations.
The Korean economy is suffering from a chronic disease. Chronic diseases cannot be defeated with emergency drugs. They can be combated with a healthy diet and regular exercise. Korea’s illness is worsening under the care of stubborn and misled doctors.
JoongAng Ilbo, Aug. 21, Page 30