Income-led growth key to Moon's economic policy
Kim Jin-pyo, head of the State Affairs Planning Advisory Committee, presents the Moon Jae-in government’s five-year policy roadmap at Cheong Wa Dae, Wednesday. / Yonhap
By Yoon Ja-young
The Moon Jae-in administration will focus on bolstering household income and setting up fair economic surroundings. The working class, the middle class as well as small companies and startups will rise as key pillars of the economy.
The State Affairs Planning Advisory Committee announced Wednesday that the economy should shift to hope and integration from instability and anger.
“An economic model based on fairness and innovation should be set up to get rid of the pain and anxiety stemming from low growth and economic uncertainty, social inequity, and an unfair economic structure,” it said.
It suggested “sharing economic growth” as the top policy objective. It means the focus of economic policies will shift to individuals and households, from the nation and businesses, under the belief that all should share in the fruits of growth.
The committee stressed recovering “the virtuous circle of the economy where increased household income triggers consumption, leading to more investment and production.”
Creation of quality jobs is the starting point of income-led growth. The government unveiled plans to create 810,000 jobs in the public sector and support youths and females in becoming employed. Bolstering the social safety net for the unemployed and retirees as well as tackling household debt are also included in the income-led growth plan.
Also, setting up fair economic surroundings is among key policy objectives.
“Due to the concentration of economic power of a few conglomerates and irregular control of corporations by chaebol owner families, an imbalance has increased between conglomerates and SMEs. The economy will make another leap forward only by getting rid of the unfairness,” the committee said.
The Fair Trade Commission (FTC) will focus on preventing power abuse of conglomerate owner families as well as improving their governance structure. The circular shareholding among conglomerate subsidiaries should be demolished step-by-step while the electronic voting system will be adopted to prevent power abuse by major shareholders.
A presidential committee will also be set up to get rid of unfair practices victimizing small suppliers while collective lawsuits will be adopted to better protect consumers.
The committee stressed that the middle and working classes are sustaining pillars of the Moon administration. The Financial Services Commission (FSC) will take measures to help the working class increase their assets. The government will also concentrate on lessening their economic burdens, including transportation and communication expenses. Building more express metros and expanding public Wi-Fi are included in the plan.
“The Fourth Industrial Revolution led by science and technology” is another key policy objective of the Moon administration. A presidential committee will be set up as a control tower to prepare for the Fourth Industrial Revolution. Software and ICT industries will lead the initiative. Network for the internet of things (IoT), 10 gigabyte internet service, and the commercialization of fifth generation telecom are among the plans to set up infrastructure. There will be more research, especially for new growth engines including smart cars, 3D printing, and drones. Raising the ratio of renewable energy in the total power generation to 20 percent, the government will seek eco-friendliness and high-efficiency in energy policies.
The committee added that start-ups and small-sized firms will be major pillars of the Moon administration, leading innovative growth. On top of setting up surroundings in which anyone can launch a start-up, the government vows to narrow the wage gap between conglomerates and small firms to solve the labor shortage problem of the latter by subsidizing their hiring of young workers.
For balanced growth among regions, old downtown areas will be renovated. The government will also focus on making rural areas attractive enough to entice residents to return.