Insisting they’re rightThe deterioration in employment and Korea’s income gap calls for a stronger push of the income-led policy, said Jang Ha-sung, presidential policy chief, defying escalating concerns about the ill effects of the liberal government’s wage-led policy.
Since 2000, growth in the economy has not helped to increase household incomes, Jang argued in a meeting at the Blue House over the weekend. Instead it only widened the wage gap, and weakened job security and corporate investment.
The share of household income against gross national income dropped from 68 percent to 61 percent while the ratio of corporate income rose from 17 percent to 25 percent. The argument was that the fruits of economic advancement were not reaching households.
His argument backed the logic behind a policy to bolster incomes. But regardless of the justice in his theoretical reasoning, if a policy causes more harm than good, it must be reexamined and fixed.
He also defended the hike in the minimum wage, saying it is just a part of the income-led growth policy.
President Moon Jae-in in a message to the Democratic Party’s convention said he was confident that the government was steering the economy in the right direction. The quality and quantity of employment has improved, and the economy has been growing at a faster rate than under the previous government. Household incomes in general improved and exports in the first half were record-high, he said.
His understanding of the economy may be approved by his party, but is not likely to get the same response from the public. The economy is in much worse shape than the president claims. Monthly job additions that averaged 316,000 last year slumped to the 100,000 level in February and sank to 5,000 in July. Exports are strong only because of semiconductors. Even the outlook for semiconductors has darkened with increases in inventories inroads by producers in China.
The public sector added jobs entirely due to fiscal spending. Although the headline household incomes figure rose, incomes among the three bottom brackets fell.
Jang has a point, but the economy cannot be told what to do. The policy must change. Shopkeepers and small merchants are planning street protests because the government is turning a deaf ear to their pleas for moderation in the minimum wage. Instead of merely insisting they are right, Blue House policymakers must connect to the real world.
JoongAng Ilbo, Aug. 27, Page 30