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(EDITORIAL from Korea Times on Jan. 3)

All News 07:06 January 03, 2019

Making people better off
Innovation, deregulation key to sustainable growth

South Korea's exports exceeded $600 billion last year, seven years after reaching $500 billion. This figure made the country join the club of big seven traders ― the U.S., Germany, China, Japan, France and the Netherlands. The nation's per capita income also surpassed $30,000.

Yet few people feel they have become better off, despite such outstanding achievements. Many ask why. We can cite two major factors: deepening income inequality and a failure to create new jobs. Since the outbreak of the 1997-98 Asian financial crisis, the wealth gap between the haves and have-nots has continued to widen.

Job creation has become more difficult because corporations, especially large ones, have reduced their workforce steadily through factory and office automation with the help of rapid advances in technologies. No matter how briskly the economy grows, employers find it unnecessary to hire more workers.

Making matters worse, low economic growth has increasingly become the order of the day. This trend has made it harder to offer more job opportunities, particularly for young jobseekers. That's exactly why President Moon Jae-in said Wednesday the country is facing a serious challenge, adding that low growth has now become the norm.

"We have come to be better off, but the time when we will all be better off is still far away," he said in a meeting with top business leaders to mark the start of the New Year at the Seoul headquarters of the Korea Federation of SMEs. Moon's remarks apparently reflected the aggravating economic situation that has continued to sap the nation's growth potential, with his much-avowed "income-led" growth policy going nowhere.

Moon has yet to scrap his policy of creating more jobs and bringing higher income to the working class. Rather, he has vowed to keep the inclusive growth policy to make the people better off together. But the problem is whether smaller businesses can endure steep hikes in the minimum wage which increase 16.4 percent last year and 10.9 percent this year.

No one can deny that higher wages, combined with a shortened 52-hour workweek, have forced businesses to cut down on the number of employees. So it is no surprise that the Moon administration has failed to meet its target of creating 300,000 new jobs in 2018. Opposition lawmakers and Moon's critics are accusing the liberal government of causing a total economic failure.

Against this backdrop, President Moon has promised to create a favorable environment for corporations to increase investments. "Both economic growth and job creation come from corporate investments," he said in the meeting. This undoubtedly sounds like music to the ears of businesspeople.

Yet what's at stake is how to keep his promise. Moon has called for innovation across all industries, saying the country can make the economy more dynamic and get out of the low-growth trap by promoting innovation. His stress is not new, given that his economic formula is growth led by income and innovation.

But the Moon government has done little to implement the innovation-fueled growth policy. So this year, it remains to be seen whether he will put more weight on innovation to speed up economic recovery and ensure sustainable growth. Can he also listen more carefully to rising demand for deregulation?

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