By Yoon Ja-young
Those in the business circle welcomed President Park Geun-hye’s economic initiatives delivered in a speech Monday, but with caveats about some elements and doubts about others.
“President Park dedicated over two-thirds of her New Year address in showing a determination to revitalize the economy. We will make efforts to increase corporate investment and exports,” said the Federation of Korean Industries, the big business lobby group.
The Korea International Trade Association said Park was right to focus on structural problems that hamper economic recovery from reaching the general public. “The innovative education system and regulation-free business environment helped the U.S. economy recover fastest from the global financial crisis,” it said, calling for a business-friendly environment and expansion of economic territory.
The Korea Employers Federation focused on labor market reform. “The labor market should be flexible and there should be fundamental measures to change its dual structure market,” it said, referring to the problem of regular and non-regular workers.
The Korean Confederation of Trade Unions said Park isn’t giving proper answers despite the huge significance of the labor issue. “A reporter asked a question about the irregular workers problem, but there wasn’t anything new in the answer by the President. She just wants to push ahead with the old plan, only showing arrogance and unwillingness to communicate with the people. I wonder what she held the press conference for,” its spokesman said.
The Government Employees’ Union pointed out that the President did not mention “economic democratization,” one of her main campaign pledges that aims to channel wealth from conglomerates to the general public. It said, “The deregulation of the financial sector, innovation of the public sector and restructuring of the labor market in her speech equal helping conglomerates make more money.”
Lee Geun-tae, an economist at LG Economic Research Institute, said the government is going in the right direction as structural reform is needed to enhance growth potential.
“Previously, overseas demand or a booming housing market could help vitalize the economy, but now it is difficult to find such positive factors. It is thus important to strengthen the fundamentals of the economy. Korea’s labor market, in that sense, has room for better growth potential, as it is in some ways hindering investment and the job market,” the economist said.
Lee, however, stressed that government should not ignore the balance between growth and distribution.
Park Deok-bae, a research fellow at Hyundai Research Institute, said labor market reform will test the administration’s capability. “The labor market won’t accept reform, but it is up to government to lead successful negotiations,” he said.
In the press conference, President Park said this year was a golden time to revitalize the economy.
“Korea is at the crossroads of making a leap forward or falling into stagnancy. We need fundamental change in the system and customs to innovate the economy and secure growth potential,” she said.
Park added that the government will continue with reform of the public sector. The focus this year will be reorganization public institutions as some of their functions have become obsolete or overlap. “When these efforts pay off, productivity and efficiency in the public sector will be enhanced to provide public services in the cheapest and most efficient way,” the President said.
She went on to call for the reform of the government employee pension program. She pointed out that taxpayers, who shouldered 2.5 trillion won last year to make up for a deficit in the pension program, will be shouldering 10 trillion won in a decade. The President hinted there will be incentives, such as extension of the retirement age and adoption of a peak wage system, and asked government employees to cooperate with the plan.