By Yoon Ja-young
Strategy and Finance Minister Kim Dong-yeon is throwing his backing behind innovation policies, one of the major economic strategies of the current administration along with income-led growth. The minister, who is celebrating one year in office, has recently protested Cheong Wa Dae's steep wage hikes, but now is expected to concentrate on deregulation and support for start-ups.
"The government will concentrate all its efforts to speed up innovative growth. Most of all, deregulation should come up with visible outcomes," he said while presiding over his first ministerial meeting on the issue Friday.
The meeting was organized following President Moon Jae-in's demand last month that the administration speed up innovative growth efforts.
Kim, who was inaugurated as the country's economic control tower in June last year, seemed to be overshadowed by economic policy planners at Cheong Wa Dae. The administration came up with a tax hike on conglomerates and high-income earners, as well as a revision on property taxes, despite Kim's promise that they were not part of the government's agenda.
Recently he has been making his own voice heard. While the administration is scheduled to steeply raise minimum wages for the next few years under the income-led growth plan, Kim noted that it has negatively affected the job market. He stressed that it should slow down the pace of the hike, despite Cheong Wa Dae's insistence that there is no evidence of a negative impact. The controversy seems to be wrapped up with Kim seemingly gaining control over economic policy, presiding over a meeting on household income.
He also successfully boosted the economy which achieved a 3 percent growth last year, for the first time in three years. The country is also expected to achieve $30,000 per capita gross national income (GNI) this year, 12 years after reaching the $20,000 mark in 2006.
Among the three main economic growth pillars of the Moon administration, which are income-led growth, innovative growth and a fair economy, the finance minister will be focusing on innovation as not much progress has been achieved there.
"The administration set up a good blueprint for the innovative growth, but its implementation progressed much slower compared with income-led growth plans. The government should speed it up," said Cho Gyeong-lyeob, the chief economist at the Korea Economic Research Institute.
At the meeting Friday, Kim said the government will bolster support so that businesses can start investment projects that lead to jobs. For innovative industries such as future cars, smart farms and smart factories, the government is planning support by setting up infrastructure and increasing government purchases.
He also said the government will seek measures to increase labor market flexibility, while bolstering the social safety net in the 2019 budget.
On the same day, he also met Shinsegae Group Vice Chairman Chung Yong-jin, stressing that cooperation with the corporate sector was essential for innovative growth.
Ju Won, the chief economist at the Hyundai Research Institute, said that Kim may have to focus on preventing a short term recession.
"Discussion over income-led or supply-led growth strategies may be meaningful in the mid- to long-term, but for time being, the government will have to concentrate on preventing an economic recession," he said, pointing to increasing downward pressure on the economy.
Strategy and Finance Minister Kim Dong-yeon is throwing his backing behind innovation policies, one of the major economic strategies of the current administration along with income-led growth. The minister, who is celebrating one year in office, has recently protested Cheong Wa Dae's steep wage hikes, but now is expected to concentrate on deregulation and support for start-ups.
"The government will concentrate all its efforts to speed up innovative growth. Most of all, deregulation should come up with visible outcomes," he said while presiding over his first ministerial meeting on the issue Friday.
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| Strategy and Finance Minister Kim Dong-yeon |
Kim, who was inaugurated as the country's economic control tower in June last year, seemed to be overshadowed by economic policy planners at Cheong Wa Dae. The administration came up with a tax hike on conglomerates and high-income earners, as well as a revision on property taxes, despite Kim's promise that they were not part of the government's agenda.
Recently he has been making his own voice heard. While the administration is scheduled to steeply raise minimum wages for the next few years under the income-led growth plan, Kim noted that it has negatively affected the job market. He stressed that it should slow down the pace of the hike, despite Cheong Wa Dae's insistence that there is no evidence of a negative impact. The controversy seems to be wrapped up with Kim seemingly gaining control over economic policy, presiding over a meeting on household income.
He also successfully boosted the economy which achieved a 3 percent growth last year, for the first time in three years. The country is also expected to achieve $30,000 per capita gross national income (GNI) this year, 12 years after reaching the $20,000 mark in 2006.
Among the three main economic growth pillars of the Moon administration, which are income-led growth, innovative growth and a fair economy, the finance minister will be focusing on innovation as not much progress has been achieved there.
"The administration set up a good blueprint for the innovative growth, but its implementation progressed much slower compared with income-led growth plans. The government should speed it up," said Cho Gyeong-lyeob, the chief economist at the Korea Economic Research Institute.
At the meeting Friday, Kim said the government will bolster support so that businesses can start investment projects that lead to jobs. For innovative industries such as future cars, smart farms and smart factories, the government is planning support by setting up infrastructure and increasing government purchases.
He also said the government will seek measures to increase labor market flexibility, while bolstering the social safety net in the 2019 budget.
On the same day, he also met Shinsegae Group Vice Chairman Chung Yong-jin, stressing that cooperation with the corporate sector was essential for innovative growth.
Ju Won, the chief economist at the Hyundai Research Institute, said that Kim may have to focus on preventing a short term recession.
"Discussion over income-led or supply-led growth strategies may be meaningful in the mid- to long-term, but for time being, the government will have to concentrate on preventing an economic recession," he said, pointing to increasing downward pressure on the economy.
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