A path to becoming the economic president for all Koreans

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A path to becoming the economic president for all Koreans

Published: 09 Jun. 2025, 00:03

Audio report: written by reporters, read by AI

Kim Dong-ho

The author is an editorial writer at the JoongAng Ilbo.

With the launch of President Lee Jae‑myung’s administration, Korea’s economic outlook has shifted. The Kospi index surged past 2,800 shortly after he took office, fueling optimism that his pledge may usher in a Kospi-5,000 era. This surge reflects two factors: the end of political uncertainty following the snap election and the belief that an economics-focused presidency can revive confidence in the markets.

In his inauguration address, Lee stated, “There is no ideology, only pragmatism,” and asserted, “If needed and useful, we will use policies from Park Chung Hee or Kim Dae‑jung.” Throughout his career, Lee has pursued a pragmatic, people-centred economic approach — what he has termed “Meoksanism”(a livelihood-first philosophy) and “inclusive innovation growth.” His agenda proposes practical measures such as providing basic rights in housing, health care, child care and education, as long as direct cash handouts are avoided.

Kospi closes at 2,831.11 on June 5, the highest figure in 2025, a day after the inauguration of President Lee Jae-myung. In the picture is a worker at a Hana Bank branch in central Seoul. [NEWS1]

Economic inequality has long driven ideological tension in Korea. Korea’s per capita income has surpassed that of Japan, yet elderly poverty remains high, and addressable crimes driven by economic distress continue. While individual adjustment plays a role, inadequate social safety nets are a structural problem. Lee’s balance between welfare and growth—“pragmatic market‑oriented governance” — answers the demands of this moment.

Yet stock prices alone won’t stay elevated without real economic drivers. Market value reflects corporate profits. To maintain market momentum, companies must invest and hire. President Lee echoed this in his speech, referring to growth 22 times, following a clear strategy to restore the country’s growth engine.

Yet the administration also plans to advance policies such as the Yellow Envelope law, amendments to the Commercial Act, a 4.5-day workweek, and uniform mandatory retirement age extensions — measures some say could undermine business investment and hiring.

An executive from a listed company shared concerns: “We worry a lot when business owners meet. We already have many days off, and now work time may be further reduced. Expanding legal immunity for unions and broadening directors’ fiduciary duty to shareholders will make it hard for managers to focus on growth. They’ll focus on protecting their control.”

If policymakers proceed without weighing these risks, the recent market rally could quickly reverse course. Current stock gains stem in part from an anticipated global easing of interest rates. Declining rates have also revitalized the housing market since late last year.

Sustainable economic improvement requires that Lee’s commitment to market‑centered pragmatism be more than rhetoric. Aging regulations should shift to a negative-list system that allows entrepreneurs to innovate freely. If a business has a viable idea, government should not stand in its way.

However, in response to pressure from large labor unions supporting him in the election, the administration is fast-tracking business-limiting reforms like the Yellow Envelope law and Commercial Act amendments. Authorities argue these may enhance undervalued corporate value, but businesses see potential governance instability. This may prompt a shift from proactive growth to defensive tactics.

Real estate offers another litmus test. Lee said, “If prices rise, why push them down? Using taxes as a punitive tool will not justify itself.” This is a pragmatic policy aimed at letting rising markets respond naturally, with the existing tax burden adjusting automatically.

Apartment buildings seen from Mount Namsan in central Seoul on April, 2025. [YONHAP]

Yet voices calling for stronger taxation to curb real estate prices are growing louder. Low interest rates have stimulated property gains — on Seoul’s Gangnam district in particular — but hastily imposing high taxes fuels speculation and may push prices even higher, as seen during the Roh and Moon administrations.

Still, runaway property prices must be checked. They exacerbate inequality, inflate household debt, and drag down domestic consumption. The solution lies in increasing supply. Lee proposed accelerating approvals and allowing higher-density construction. Restricting gap investments through tighter lending could also help.

As in all matters, economic policy cannot favor only one side. President Lee must resist extreme agendas — even if these alienate some union supporters — and steer toward the center. That is how he can become the economic president for all Koreans.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.