The author is a senior columnist of the JoongAng Ilbo.
“We are Korean people too!” reads a banner held up by shopkeepers and small merchants in opposition to the steep hike in the minimum wage. The scene epitomizes the divide and confusion caused by the Moon Jae-in administration’s economic policy.
The shopkeepers turned to street protests to fight for their survival. “The government only cares for the unions of large companies. We are also people the government must pay attention to,” they complain.
The minimum wage is a tricky issue. The government’s approach was rapid and radical as it pushed up the minimum wage with ideological devotion. Its actions hit mom-and-pop stores like a hurricane.
Their banners are violent yet sensible. They call for the withdrawal of the ruinous minimum wage hikes and different standards for the minimum wage to reflect the nature of business and income. The government refuses to compromise. It wants to see its merciless, universal hike through until it reaches its goal of 10,000 won (＄8.91) per hour by 2020.
The Moon government, in its second year, has poured 54 trillion won into the economy to create jobs. Despite the colossal spending, the results have been pitiful. In July, only 5,000 new jobs were created. Compared to average monthly job increases of 310,000 in 2017, this figure is catastrophic. The people are asking where their tax payments have gone. The figures say it all. They expose the fragility of the Moon administration’s economic policy.
Here is where the law of inertia kicks in. The government pledged another massive spending package worth 22 trillion won next year to help create jobs. The move drew criticism from within the administration. Kim Kwang-doo, the vice chairman of the National Economic Advisory Council, was blunt. “Trying to increase jobs through fiscal spending is no solution. It is an addiction,” he said. Who would want to work hard if the government squanders tax funds?”
The minimum wage hike, fiscal funding, and the new 52-hour workweek are all part of the Moon administration’s income-led growth policy. It is meant to help the socially weak, working class and the underprivileged, who had been deprived of the fruits of past prosperity.
But the theory did not work out in the real world. The policy, which is aimed at helping working people, ended up worsening their livelihoods. The working class has stood up to the ideology-led policy.
However, the progressive front is defiant. They are used to fighting and persevering. The inner circle of the ruling party is made up of labor and civilian activists. Jang Ha-sung, President Moon’s policy chief, was a professor for more than 30 years. But his name is more closely associated with the People’s Solidarity for Participatory Democracy (PSPD), a progressive nonprofit body whose goal is to challenge the economic mainstream.
They are eager to put long-held theories and ideas into practice. Their commitment strengthens the power of the inner circle. Their policies feed anti-corporate sentiment. They do not know how hard it is to do business and make money. The struggle to make money is as hard as it was to achieve democracy.
Anti-business sentiment has hurt Korea Inc. and put the brakes on the drive for deregulation. It has hurt jobs in the manufacturing sector. In just a year, over 140,000 jobs of people in their 40s, the peak age to work and spend, have been lost. Those in their 40s are the primary drivers of the working population. They mostly supported the removal of the corrupt conservative president and elected the liberal candidate Moon.
The biggest support base for the liberal government has become its biggest victim. Their disgruntlement and rage could threaten the liberal administration. Yet the inner circle clings to the policy as if it is more important than the people’s lives.
Chung Duck-koo, chairman of the North East Asian Research Foundation, attributes their obsessive devotion to the income-led growth policy to their indebtedness to labor and civilian groups for ousting the conservative government and winning back governing power for the liberals after a decade. “President Moon could steer towards innovation-led growth after he frees himself from the sense of indebtedness to those forces,” he advises.
A group made up of the same flock tends to be narrow-minded, lopsided and extreme. Kim, the vice chairman of the advisory board, calls for “openness” in policy governance. “Self-righteousness can generate flawed policies. One must pay heed to the voices of the people with other views to seek balance,” he stressed.
President Moon’s policy chief, his economic aide, senior secretaries on job policy and others are running economic affairs. The horizontal and overgrown power structure disrupts the need for focus and simplicity in economic policymaking. “Why are there so many aides in charge of the economy in the Blue House, and why is a separate secretary on jobs is needed when the core of economic policy in jobs is incomprehensible?” said Jin Nyum, a former finance minister.
Moon’s policy chief has pleaded with people to wait until the end of the year to cast judgement. Finance Minister Kim Dong-yeon called it “wishful thinking.” The course must change.
If the current path is kept until the end of the year it will be too late. The jobs policy could be muddled again. Timing is crucial in policy success. The president must make a decision.
JoongAng Ilbo, Aug. 23, Page 31