Untouchable income-led growth

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Untouchable income-led growth

The Financial Supervisory Service (FSS) raised eyebrows through a stumble over a press release that was negative about the hot-button minimum wage policy of the government. It recalled a press release to delete a comment connecting a surge in emergency loans to self-employed to the spike in the minimum wage. In the original press material on use of emergency loans for the self-employed in need, the financial watchdog said the loans increased because self-employed workers were struggling as a result of the minimum wage hike.

It issued a replacement press release after dropping the comment. The regulator said it omitted the commentary because it was not backed by empirical evidence. But few believe its explanation. The agency would have wanted to avoid irking the Blue House, which is under fire for hanging on the income-led growth policy despite mounting criticism from mainstream economists and the media.

In a radio interview, Hong Jang-pyo, who had designed the Korean-style income-led growth policy as the senior economic adviser to President Moon Jae-in and is now heading a special presidential committee devoted to the growth policy, said that self-employed people were not in trouble because of the policy. Instead, he blamed it on the weakened trickle-down effect from large companies and overcrowding in the self-employed retail sector. He is putting his head in the sand just like the government tried to blame climate change and demographic factors for the sharp deterioration in the job market.

A report from state think tank Korea Development Institute said that latest job woes cannot be explained simply through demographic changes and economic conditions. Although it did not outright pinpoint the minimum wage hike and cutback in working hours, the think tank was actually pointing to the government’s income-led growth policy as the immediate cause of harm to the job front.

Even statistics are being doubted after the chief of the national statistics office was replaced with a scholar who approves of income-led growth. Abnormalities are taking place in the government because of its commitment to a strange experiment with a half-baked economic theory. The government refuses to listen to the doctor’s advice. But unorthodox treatment can be highly dangerous and even deadly.

JoongAng Ilbo, Sept. 12, Page 34
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