New strategy needed to get economy back on track
Almost all economic figures show the income gap between the haves and have-nots has continued to widen, despite the Moon Jae-in government's inclusive growth policy. More seriously, the situation is likely to deteriorate further next year.
The polarization is evident in the 2018 report on household finance and welfare released Thursday by Statistics Korea, the Bank of Korea and the Financial Supervisory Service.
According to the report, income earned by those in the top 20 percent of the income bracket was seven times as much as that of those in the bottom 20 percent in 2017, up from 6.98 times in 2016.
The Gini coefficient, a key measure of income disparity, still remained at a relatively high level of 0.355 last year, the same as 2016. Worse, there is little sign of narrowing the income inequality due to a sizable decline in the number of new jobs amid the prolonged economic slump.
Since his inauguration in March 2017, President Moon has been engrossed in implementing his much-avowed "income-led growth" policy to generate more jobs and bring higher incomes to the people. However, his policy has so far failed to deliver any successful results. It has reduced jobs and wages, especially for poor workers.
Still, the Moon administration has yet to acknowledge its failure. Instead it sticks to the income-driven growth formula, although Moon hinted at a policy shift on Monday at an expanded meeting of economy-related ministers to work out next year's strategy.
It would be too much to ask Moon to give up his inclusive growth policy. This is because the country needs to do more to redress the serious wealth gap. If we cannot tackle this issue properly, the income divide will tear our society apart further. This could undermine social cohesion and harmony, leading to a clash between rich and poor.
The middle class is the backbone of democracy. Therefore Moon's inclusive growth strategy is crucial to beefing up the middle class. But the problem is how to achieve this. His income-fueled growth scheme has done more harm than good because smaller businesses and the self-employed are hiring fewer workers to reduce labor costs amid a steep rise in the minimum wage and a shortened workweek.
Moon and his policymakers should rack their brains to map out a new strategy that encourages corporate investment and generates jobs. For this, they must shift their focus to reinvigorating the sluggish economy. It will be much more difficult to increase job opportunities as long as the economy continues its downward spiral.
We hope Moon will make good on his promise to become the job-creating President. But he should realize he can neither bring more jobs to the people, nor narrow the income disparity without getting the economy back on track.
Almost all economic figures show the income gap between the haves and have-nots has continued to widen, despite the Moon Jae-in government's inclusive growth policy. More seriously, the situation is likely to deteriorate further next year.
The polarization is evident in the 2018 report on household finance and welfare released Thursday by Statistics Korea, the Bank of Korea and the Financial Supervisory Service.
According to the report, income earned by those in the top 20 percent of the income bracket was seven times as much as that of those in the bottom 20 percent in 2017, up from 6.98 times in 2016.
The Gini coefficient, a key measure of income disparity, still remained at a relatively high level of 0.355 last year, the same as 2016. Worse, there is little sign of narrowing the income inequality due to a sizable decline in the number of new jobs amid the prolonged economic slump.
Since his inauguration in March 2017, President Moon has been engrossed in implementing his much-avowed "income-led growth" policy to generate more jobs and bring higher incomes to the people. However, his policy has so far failed to deliver any successful results. It has reduced jobs and wages, especially for poor workers.
Still, the Moon administration has yet to acknowledge its failure. Instead it sticks to the income-driven growth formula, although Moon hinted at a policy shift on Monday at an expanded meeting of economy-related ministers to work out next year's strategy.
It would be too much to ask Moon to give up his inclusive growth policy. This is because the country needs to do more to redress the serious wealth gap. If we cannot tackle this issue properly, the income divide will tear our society apart further. This could undermine social cohesion and harmony, leading to a clash between rich and poor.
The middle class is the backbone of democracy. Therefore Moon's inclusive growth strategy is crucial to beefing up the middle class. But the problem is how to achieve this. His income-fueled growth scheme has done more harm than good because smaller businesses and the self-employed are hiring fewer workers to reduce labor costs amid a steep rise in the minimum wage and a shortened workweek.
Moon and his policymakers should rack their brains to map out a new strategy that encourages corporate investment and generates jobs. For this, they must shift their focus to reinvigorating the sluggish economy. It will be much more difficult to increase job opportunities as long as the economy continues its downward spiral.
We hope Moon will make good on his promise to become the job-creating President. But he should realize he can neither bring more jobs to the people, nor narrow the income disparity without getting the economy back on track.
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