ED Drifting reforms

Upon taking office 17 months ago, President Yoon Suk Yeol vowed to reform three areas: labor, pension and education, in order to ensure Korea’s long-term growth.

However, none of these structural reforms are getting anywhere.

The Yoon administration tried to enhance labor market flexibility and address the excessive power of labor unions.

However, its attempt to introduce a maximum 69-hour workweek and demand more accounting transparency by large unions led to resistance against labor repression. Now, even the more moderate of the two umbrella unions refuses to talk with the government. Behind the failure is Yoon’s unwarranted pro-business policy and hatred of center-left unionism.

Pension reform is also drifting into a gridlock because the government cannot persuade people to pay more yet receive less. The limbo will likely continue until after the parliamentary polls next April. Education reform has yet to take the first step amid rising confusion about the college entrance system.

These reforms are faltering at a time when Korea Inc. faces one of its darkest economic moments. The nation’s growth rate is the lowest it has been since the 1997 Asian financial crisis and the 2008 global financial crisis. Economic forecasters say Korea will remain in the doldrums for a long time. On the homefront, household debt and property bubbles reduce the room for policymaking. Abroad, global political uncertainties expose Korea to even bigger external risks and problems.

To overcome a short-term slump, governments usually mobilize all steps available, mixing monetary and fiscal policies. This one cannot, and will not do so. Last Thursday, the Bank of Korea froze its benchmark interest rate for the sixth straight month. The BOK can neither lower nor raise its policy rate as it is sandwiched between sluggish growth and lingering inflation on the one hand and hefty private-sector debt on the other. The government is prioritizing fiscal soundness as its utmost goal. Therefore, it will not turn to pump-priming measures.

Most experts do not regard the nation’s long-term outlook as being bright, either.

BOK Governor Rhee Chang-yong has long maintained that Korea entered a low-growth phase, citing the country’s low birthrate and rapidly aging population. Rhee then called for structural reforms, saying the choice lies with the people and politics. We agree. Most Koreans understand what their country needs in the long term, but are unwilling to accept short-term losses to get there. That’s where politics should come in. What Yoon has done over the past 17 months is far from desirable.

During the election campaign, Yoon’s two keywords were fairness and common sense. However, the president’s catchy words changed to freedom and an ideological fight later. That was a big step backward for Korea.

The chief executive must stop his ideological battles and stop blaming his center-left predecessor for everything that's wrong. Yoon’s role model, Lee Myung-bak, also tried to reverse everything his liberal predecessor did. Under Lee, the economy performed poorly, society was divided and inter-Korean relations collapsed. For an economic recovery, Yoon must go back to the basics.

It is a relief that the president is displaying signs of change since the ruling party’s humiliating defeat in a Seoul district mayoral by-election that took place a few days ago. Yoon has since mentioned words like communication, harmony and the public's livelihood. “The people are always right,” he said.

We hope he meant it.

To turn his vows of structural reforms into reality, Yoon must create a national consensus through the persistent persuasion of numerous groups with different interests. For this, the chief executive must meet his political opponents whether or not the latter holds a parliamentary majority. Yoon must also pick talent regardless of ideological beliefs to create a dream cabinet. He can start by replacing his economic "czar," Minister of Economy and Finance Choo Kyung-ho, with someone who has more independent thoughts instead of currying favor with his boss.

We may be asking too much from a president with such a weak political base surrounded by many yes-men.

However, if Yoon reflects on his initial motto and looks further than the next general election in pursuing reforms, he can still become a leader with an impressive legacy.

This is the time for the president to think about what is good for the country and himself.