Learn from MacronBoth were elected to office in May 2017. Both have recently completed half of their five-year terms, but their scoreboards are in no way similar. One is in the spotlight for his unwavering reform drive. The other is fighting an economic disaster with fears of deflation after a recession.
France used to be referred to as Europe’s patient. It struggled under its chronic low growth and high unemployment. Any attempt to reform was overturned by militant unions. French President Emmanuel Macron pressed through with sweeping reforms despite vehement opposition from the unions. The young leader who used to be a banker directed reform strictly with respect to the market and companies. He lowered corporate tax rates and made it easier for employers to dismiss and hire workers. Unions protested that a flexible market would bring about a flood of unemployed people on the streets. But the result was the opposite. Companies instead began to increase their number of new hires thanks to their eased burden on dismissal. The unemployment rate in France fell to a 10-year low, while the ratio of permanent jobs shot up to an all-time high. Macron is currently overhauling the government structure by reducing public sector jobs.
Macron’s leadership has reinvigorated the patient in Europe. France is expected to outperform Europe’s leader Germany in growth this year. The Wall Street Journal, Financial Times and others all have spotlighted Macron’s leadership in their coverage of the country’s success. His approval rating, which plunged to 20 percent after the massive “yellow vest” protests, has recently shot up to 38 percent.
President Moon Jae-in has done exactly the opposite. He raised corporate taxes and forced contract workers to be converted to permanent workers to further reduce labor flexibility. He hardly communicates with the general public. He has vowed to increase government employees by 170,000. As a result, investment is sluggish, jobs are rare and growth is at its slowest in a decade. Companies are leaving the country in search for a better business environment. Income disparities have worsened, and the middle class is thinning. Moon’s approval rate has fallen to 32 percent.
Still, the president insists that “the economy is heading in the right direction” and remains stubborn in his policies. The public is paying the price for his dangerous experiments. He must learn from the revival of France. His backfiring income-led growth policy should be stopped. He must humbly learn from Macron’s reform-guided leadership and restructure the economy if he seriously wishes for the economy to move in the right direction.