BOK chief says employment, structural reform keys to growth
South Korea's top central banker on Monday called for stepped-up efforts to create quality jobs and spearhead structural reform, calling them keys to balanced and sustainable growth.
In his opening remarks marking the start of an annual international conference, Bank of Korea (BOK) Gov. Lee Ju-yeol said the role of employment has shifted from supporting economic growth to one that ensures growth.
"I believe that the 2008 global financial crisis gave us an opportunity to rethink the importance of employment. Until the crisis, the role of employment had not moved beyond supporting the demand for labor needed for economic growth," he said. "Given the persistence of low growth since the crisis, however, it is now widely recognized that employment should play an active role in stimulating growth."
The BOK chief insisted such a shift stemmed largely from a structural change, which was partly caused by a change in demographics and the way people spend money.
"Despite active policy efforts by individual countries to enhance their economic dynamism through various unconventional measures, economic recoveries are being delayed. And this suggests the possibility of structural changes in the global economy since the crisis. From the aggregate demand perspective, the structural change is associated mainly with population aging, growing debt and worsening income imbalances, which result in a decline in consumption and investment," Lee said.
"If this low growth is attributable in large part to structural changes in the economy, then I think we need to shift our policy response paradigm to address it," he added.
Lee stressed a need to boost employment, which in turn will raise household income and thus spending.
"To this end, we should strive to maintain the macroeconomy in a stable manner, to create conditions favorable to employment," he said.
The BOK chief noted a need for policy measures to ensure increased income will lead to increased spending.
"To this end, it is necessary to alleviate people's uncertainties about the future, by reducing the imbalances in wages and employment conditions among workers, and strengthening our social safety nets," he told the conference.
The BOK governor also emphasized a need to nurture and train more workers who can meet new job requirements asked under the new digital society.
"Many people anticipate that, after the ongoing digital innovation and the fourth industrial revolution, the demand for labor will decrease and employment will shrink. But if more and more people become able to assimilate and utilize various digital technologies, such as artificial intelligence and big data, then I think such technological advancements will instead positively affect employment and growth," he said.
The BOK conference, the 12th of its kind, will be held for two days until Tuesday under the title of "Employment and Growth: Roles of Macroeconomic Policy and Structural Reform."
The conference has brought together dozens of leading economists from around the world, including Min Zhu, deputy managing director of the International Monetary Fund, and James Bullard, president of the Federal Reserve Bank of St. Louis. (Yonhap)