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| Presidential policy chief Jang Ha-sung responds to a question in a tea meeting with reporters at Cheong Wa Dae, Sunday. Yonhap |
By Kim Yoo-chul
The government won't drop its highly ambitious "income-driven growth" initiative despite growing public discontent over the negligible economic impact after increasing the minimum wage, presidential policy chief Jang Ha-sung said, Sunday.
"The Moon Jae-in administration acknowledges the pros and cons with regard to the income-driven growth strategy," the policy chief told reporters in a hurriedly arranged tea meeting at Cheong Wa Dae. "Some say the income-led growth and innovative-driven growth is a matter of choice; therefore, the administration is pressured to shift policies focusing on innovative-driven growth by relaxing regulations. But the government has no plans to abandon the income-driven growth policy."
The meeting comes at a time after Korea posted its weakest jobs growth in nearly nine years in July, adding to more pressure on President Moon to "do something more" to accelerate economic growth.
The President has proclaimed himself as a "jobs president" but his achievements in the economic sector lag behind his peace efforts with North Korea as seen with April's Panmunjeom Declaration in which North Korean leader Kim Jong-un committed to peace with nuclear disarmament.
This put his approval rating at risk. In the wake of the June 13 local elections, in which the ruling Democratic Party of Korea swept across critical key provincial governorships and mayoralities, President Moon's approval rating shot to 79 percent. Then by about third week of August, it dropped to the 50 percent level, according to market research firms.
Jang apologized to see the local job market weak and income inequality widened despite the policy measures the government applied.
"Although we are seeing an increased employment rate and the economy is on track to add more jobs, in general it's true that jobs growth was slowed. We have to figure them out. The government will adjust policies and apply all available policy tools to improve the situation for small business owners and small- and medium-sized enterprises (SMEs)," the presidential policy chief said, adding the government will encourage private companies to invest more.
According to him, the South Korean economy grew by 89.6 percent from 2000 to 2017, while national income rose 71.5 percent.
"The growth rate of household income was below that of economic growth. That's because of deepening inequality between haves and have-nots, as well as reduced income distribution due to companies stockpiling cash reserves. That means the private sector has remained passive to increasing investment since 2013, dampening the overall household income growth," Jang said.
Out of the total gross national income (GNI), the sum of a country's gross domestic product (GDP) plus net income (positive or negative) from aboard, the portion of household income was cut to 61.3 percent from 2000 to 2017, while that of corporate income was up to 24.5 percent from 17.6 percent during the same period, he added.
"Households didn't get benefits from economic growth, resulting in them cutting their spending. This cuts South Korea's growth potential. The South Korean economy is under a paradigm shift. We just don't want to shift policies to address today's pending issues. We want to improve the general living of the public by helping households earn more and by implementing policy tools relating to advancing social welfare system on multiple fronts," he said.
Jang said Cheong Wa Dae will accelerate efforts to pass bills that have been on hold in the National Assembly to ease regulations in a step to help companies invest more in next-generation businesses.
"The process will be painful but it will be a worthy challenge," he said.
