Fiscal integrity is key

In Thursday’s meeting to discuss the 2019 budget, the government and ruling party agreed to stretch next year’s spending as much as possible. Spending on jobs will be a record high. The budget aimed at creating jobs is expected to exceed this year’s 12.6 percent rise.

The Korean economy is worsening and its growth engine has lost steam. The economy may not be able to meet this year’s growth target of 2.9 percent. The government that placed job creation as its top economic priority scored pitifully on the jobs front. Monthly job additions that had stayed above 300,000 last year plunged to 100,000 and again halved to 5,000 in July.

Despite calls against the steep minimum wage increases and nonsensical income-led policy, the government insists on staying the course. It again wants to resort to fiscal expansion to cover for the damages.

Korea’s national liabilities take up less than 40 percent of its gross domestic product, lower than the 73 percent average of the members of the Organization for Economic Cooperation and Development (OECD). But that does not mean it can freely use public finance. Korea suffers from a low birth rate and is rapidly aging. Welfare costs will certainly snowball. Moreover, the country must save up for reunification. It must be prudent with public finance.

The government must not squander taxes from the people for its policy experiment. The government has spent 54 trillion won ($48 billion) to aid jobs to little avail. Jobs are made by companies. The government must change its policy direction to revitalize investment and production so that companies can make more profit to share with employees and hire more.

JoongAng Ilbo, Aug. 24, Page 30