Go to Contents Go to Navigation

(News Focus) Rival parties offer opposite remedies for ailing economy

All News 14:44 April 04, 2016

By Byun Duk-kun

SEOUL, April 4 (Yonhap) -- Apparently true to their identities, South Korea's political parties are proposing different economic policies as part of their campaign pledges that are nearly opposite in about every aspect except what the cause of the problem is.

Both the ruling Saenuri Party and the main opposition Minjoo Party are pointing to sluggish consumer spending as a root cause of problems facing Asia's fourth-largest economy that include a record high unemployment rate for young adults.

In 2015, the unemployment rate of people aged between 15 and 29 years came to an all-time high of 9.2 percent. The jobless rate of those in the same age bracket also reached a monthly high of 12.5 percent in February.

Against such a backdrop, both the ruling and main opposition parties have named creating jobs for young workers, or voters, as their No. 1 priority in their respective economic platforms ahead of the parliamentary elections to be held on April 13.

They differ, however, as to how they are seeking to expand job opportunities.

The ruling party insists companies are reluctant to invest more partly due to sluggish local spending.

Kang Bong-kyun, a former finance minister and three-term lawmaker of the main opposition bloc who is currently leading the Saenuri's campaign committee, claims increased spending by firms, especially large conglomerates, will lead to more spending by smaller firms, which in turn will spur spending by general consumers.

To this end, the 73-year-old has proposed the central bank take over outstanding loans of policy lenders, such as the Korea Development Bank, to private firms, which he says will allow the state-run banks to lend more to companies and thus lead to increased spending and investment by private firms.

However, the proposal, dubbed a Korean-style quantitative easing, is causing a heated debate as it could be seen as an attempt to tell the Bank of Korea (BOK) what to do while many say the central bank is and must be insulated from any outside pressure when making its monetary policy decisions.

Unionized workers of the BOK dismissed the ruling party's campaign pledge as a populist idea, noting the very reason the central bank is legally protected from outside pressure is to prevent such an attempt by political parties to utilize or abuse the bank's note issuing rights for political gains.

The call for the so-called Korean-style quantitative easing "seriously undermines the independence of the central bank and is the worst populist idea," they said in a statement released Thursday, two days after Kang announced the party platform.

Abusive or not, the main opposition party says the ruling party's economic policy will not save the local economy, let alone help a great number of local firms.

Kim Chong-in, interim chairman of the Minjoo Party and also a former finance minister, says the ruling party policy, if realized, will only benefit rich and large conglomerates, which are already sitting on record amounts of cash reserves.

"The Saenuri government has consistently advocated quantitative easing and eased regulations for large conglomerates for the past eight years, but they have brought no changes to economic conditions while only driving the youth jobless rate to a record high of 12.5 percent," Kim said earlier.

Following its victory in the upcoming elections, the main opposition party says it will encourage or require public firms to create more jobs for the young instead of entrusting a few, large private companies with the seemingly impossible task.

Also, the party claims a recovery in spending can only be achieved when a majority of people and companies are able and willing to spend more.

To this end, the opposition party has pledged to levy more taxes on large conglomerates, and use the fresh funds to help small and medium-sized firms.

Its main campaign pledges also include increased monthly allowances for the elderly to help spur consumer spending.

Currently, the government is paying an allowance of between 100,000 won and 200,000 won (US$87-$174) per month to about 70 percent of people aged 65 years or above.

The Minjoo Party has promised to pay a flat amount of 300,000 won each month to all people aged 65 years or above.

The ruling Saenuri Party, too, has accused the main opposition party of leaning on populist and empty pledges, noting there simply are not enough funds to realize all such promises.

"Welfare programs must be pursued carefully while closely keeping in mind financial circumstances of the government," ruling party chairman Kim Moo-sung said. "There is no country on Earth that can finance all populist welfare programs that are introduced recklessly without such care."

An earlier analysis showed the ruling party's campaign pledges will cost 56 trillion won over the 2017-2020 period, while those of the main opposition Minjoo Party will require nearly 148 trillion won over a five-year period starting in 2017.


Send Feedback
How can we improve?
Thanks for your feedback!