President plays defense on economic policy, jobs

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President plays defense on economic policy, jobs

President Moon Jae-in put a sunny spin on the economy Thursday, shifting the focus from his troubled income-led growth policy to innovation and new industries.

But at a New Year’s press conference at the Blue House, Moon said resolving economic inequalities was a core economic goal of his administration - which is also the foundation of the controversial income-led growth policy.

“Last year, Korea reached the $600 billion mark in exports for the first time in history,” Moon said in a prepared opening speech. “We ushered in an era of $30,000 per capita income …Our economic growth rate has continued to stay at the highest level among the advanced economies.

“Despite the astounding growth of the national economy - hailed by the world as a miracle - there are still many people who find life difficult,” he continued. “That is because the benefits of the economic growth that we accomplished together have been concentrated in the hands of a small number of upper class [people] and conglomerates, not equitably distributed among all the people.”

Moon said economic inequalities are not unique to Korea but that doesn’t mean they should be accepted.

“The people-centered economy and an innovative, inclusive nation being pursued by my administration are precisely in line with such thinking,” he continued. “Our goal is to create an economy in which all prosper together on the basis of a fair economy with a level playing field where innovative and income-driven growth enable sustainable development.

When he started taking questions, one reporter asked Moon how he could remain confident in his current economic policy as the economy is clearly struggling.

Moon replied, “In my address [earlier] I already explained the need for the economic policy direction. [I] don’t think there’s a need for a new answer.”

When asked what hurt him the most in his 20 months in office, Moon said job figures that failed to meet the public’s expectations.

“The job index foremost was most difficult and regrettable,” Moon said. “To figure out how to solve this problem is the biggest task for our government this year.”

The annual press conference was held one day after Statistics Korea released a report showing that additional jobs added in 2018 were the smallest in nine years - since the global financial meltdown in 2009 - and the unemployment rate was the highest in 17 years.

The president, however, stressed that he didn’t think disappointing job statistics proved that his current policy of pursuing a shared economy, innovative growth and income-led growth was wrong.

In fact, Moon said, while the jobs situation has made his government feel ashamed, there were positive signs from the administration’s income-led growth policy.

“There have been numerous positive effects,” Moon said. “Overall household income has gone up and the number of salaried employees [with job security and better benefits] has expanded,” Moon added. “Additionally, the ratio of low-income workers has shrunk, and recently, youth employment has improved significantly with the youth employment rate reaching an all-time record.”

He said while a sharp rise in the minimum wage has been blamed for a loss of jobs, especially in small businesses, the biggest problem is actually competitiveness in manufacturing.

“Fundamentally, what we need to equally take into account are the struggles of our manufacturing industries, which have been a phenomenon going on for a long time,” Moon said. “Major manufacturing industries have been under restructuring and continuously losing jobs and services related to manufacturing [are also] facing difficulties.”

He said he believed, for the Korean economy to improve, it needs to raise innovation and the competitiveness of the manufacturing industries.

“That is why I am emphasizing innovation,” Moon said.

He also urged the labor sector to be more flexible and inclusive.

“Improving the lives of the workers is extremely important in solving our society’s economic inequalities,” Moon said. “As it is well known, our government has been making exceptional efforts to raise workers’ wages, reduce working hours and upgrade contract workers to salaried workers. The labor sector has to recognize that this government is doing more than any other past administration.”

Moon said, however, an improvement in workers’ lives could only be possible when the overall economy is doing well and that raising wages could have a negative impact on the economy.

“If our economy struggles, jobs will be lost and this will lead to workers suffering,” Moon said. “How much society can accept an advancement of labor conditions and how much effect that has on our economy should be considered.”

During the press conference, the president also expressed his support for a new auto factory model promoted by the city government of Gwangju and Hyundai Motor, which, at the end, failed due to opposition from auto unions.

Gwangju and Hyundai Motor were proposing to build a new factory where wages would be less than half those paid at existing factories. The idea was that the new factory would be more competitive and would create jobs at a time of uncertainty for Korea’s existing car manufacturers.

Another goal was to create jobs outside the greater Seoul area.

Moon said it has been a long time since Korean automotive companies have built production lines in Korea rather than overseas.

“Increasing [the production] of future cars like electric vehicles and hydrogen fuel cell vehicles is one way to revive our automotive industry and strengthen competitiveness,” Moon said.

The president also commented on new industries equipped with the latest technologies. He said in the introduction of new industries, there’s always a clash with existing industries.

The government will try to convince people in existing industries to be more open to change.

He also said the government will expand support for middle-aged people and senior citizens who create start-ups, which until now have been mainly focused on young people.

“As start-ups [created] from new ideas by young people are important, start-ups that utilize experienced senior citizens are important as well,” Moon said.

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