By Lee Hyo-sik
Staff Reporter
Korea will play a bridging role between emerging economies and advanced ones at the 2010 Seoul G-20 Summit in November, while seeking ways to use the opportunity to upgrade its status to a "rule maker" from a "rule taker" in the global economic community.
In an interview with The Korea Times, Vice Strategy and Finance Minister Hur Kyung-wook said that the government will make every effort to make the upcoming G-20 summit a success.
"As a key member of the global forum, we will propose a range of agenda items, including the reform of the International Monetary Fund and other multinational financial organizations. Korea also plans to seek a win-win solution for both the advanced and developing worlds, while actively representing the interests of non-G-20 members," Hur said.
He also said the nation continues to grapple with a sluggish job market despite the recent economic recovery.
Private sector activities ― domestic consumption and corporate investment ― still remain in a slump, while the lackluster recovery in the U.S. and Europe, as well as rising oil and other raw material prices, are heavily weighing down on Asia's fourth-largest economy.
"Against this backdrop, Korea should jumpstart its growth momentum and create a cycle in which the ongoing recovery benefits not only large businesses and the rich, but also small firms and the low-income bracket. The government needs to make more efforts to help the corporate sector restructure themselves and generate jobs, and stabilize the livelihood of poor households, the vice minister said.
As for "jobless growth," which has become a serious concern for President Lee Myung-bak and policymakers, Hur said the nation's transformation into a more technology- and capital-intensive economic structure is partly to blame.
"Our economy generates fewer jobs now than in the past on the back of improved labor productivity and increasing automation. The reality is that we cannot create many jobs in the manufacturing sector because of its capital- and technology-oriented structure. Additionally, many manufacturers have moved production facilities to emerging economies for cheaper labor and land costs," he said.
But Hur stressed that Korea can create large numbers of high-quality jobs in the services sector. "Regulations should be lifted and competition should be promoted in healthcare, education and other services sectors to turn them into Korea's new growth engine and generate jobs. We should also improve labor market flexibility and establish more mature labor-management relations."
He then dismissed concerns over growing inflationary pressure on surging oil and other commodity prices in recent months, projecting that consumer prices here will increase by around 3 percent in 2010 from last year. In 2009, inflation grew 2.8 percent in the wake of the global economic crisis, down sharply from a 4.7 percent jump in 2008.
"We expect consumer prices to remain largely tame throughout the year, thanks to a stronger Korean won and the prolonged sluggish demand for goods and services. We do not think the cost of crude oil and other raw materials will surge this year as the world economy will likely recover at a gradual pace," Hur said.
Concerning the won-dollar rate, he said the foreign exchange rate should be determined by supply and demand and other market fundamentals. But Hur also said the government will engage in a "smoothing operation" if the local currency rises steeply against the dollar and other foreign currencies.
Hur said that The Korea Times should play an important role in providing foreign investors and companies with credible, precise financial and business information on Asia's fourth-largest economy.
He added that the English daily has been Korea's window to the rest of the world for the past 60 years, stressing it should assume a greater role for in the next 60 years in an increasingly globalizing world.
"But still, many non-Korean investors and opinion leaders get information from and are heavily influenced by news reports of major foreign media outlets. In particular, this is the case when it comes to financial and business issues in Korea," Hur said.
He then said that following the collapse of Lehman Brothers in September 2008, the international media rushed to release negative reports on the Korean economy, adding the government is partly responsible for this because policymakers were not successful in helping them understand the reality of the Korean economy by providing precise and accurate information.
After Lehman Brothers went bankrupt, the Wall Street Journal, The Financial Times and other media outlets issued a series of negative reports about the economy in Korea, helping to fuel massive capital outflow from the nation and scaring away potential international investors.
They even raised the possibility that the nation may face another financial crisis, playing a big part in exacerbating the extent of the negative effects on the nation.
But they turned out to be wrong ― Korea has become one of the fastest growing economies in the world, posting a record high trade surplus and stock market rallies while seeing the Korean won strengthen over the past few months.
"I am happy to see that The Korea Times has emerged as a leading English media outlet on a par with major news sources across the globe. The Korea Times offers foreigners not only business news, but also information on Korea's society and culture. The development is very encouraging," the vice minister said.