Not yet fully awake

Is the government finally starting to see reality? Finance Minister Hong Nam-ki predicted that our economic growth this year would stop at around 2.0 percent — instead of the 2.4 percent projected by the government three months ago. He was admitting that the economy would perform its worst since 2009, in the aftermath of the global financial meltdown.

The government so far has refused to pay heed to warnings and maintained confidence in its policy and the economy. President Moon Jae-in insisted that the economy was moving in the right direction and his senior secretary for economy Lee Ho-seung last week claimed that the economy was faring well. But the mood has changed after the Bank of Korea cut the policy rate last week to a record-low level. The president hurriedly summoned an emergency cabinet meeting to discuss measures to fight the “grave situation” in the economy.
The serious tone from the president and the chief of economy policy can be positive. But whether their coming to terms with the economic realities will lead to changes in policies remains to be seen.

Hwang Deok-soo, the presidential senior secretary for job creation, touted the improvement in job conditions even as latest gains in jobs were entirely led by temporarily hired senior citizens who settled for paltry pay in government-sponsored jobs. Hwang pointed to a surge in employment gains in jobs paying for 36 to 52 hours a week. But he has distorted the data. The number increased simply because the statutory cut in workweek hours to maximum 52 had forced workers to migrate to the lower group working for less time. Overall, the job additions came from those working less than 36 hours a week.

The president’s approval rating recently fell below 40 percent for the first time. The resignation of controversial Justice Minister Cho Kuk could not revive confidence in the government. Confidence will only keep slipping. The government has pushed ahead with income-led growth and other anti-market policies despite repeated warnings from economists. Now that it has begun to admit the fragility in the economy, the government must do its best to undo the wrong and make fixes to economic policies before they do more harm.

JoongAng Ilbo, Oct. 21, Page 30