Statistic Korea losing credibility

Kang Shin Wook

By Lee Kyung-min

Statistics Korea is coming under intense criticism over its move to reinstate the method to assess household income used in 2016 to allegedly produce data favorable to the government's income-led growth policy.

To that end, the statistics agency plans to spend about 12.9 billion won ($11 million) in 2019.

Critics say this is a move to “manipulate data” to help advance “income-led” growth, a much questioned growth strategy spearheaded by President Moon Jae-in.

A noted economist expressed concern about the plan, stressing the government should divert focus from trying to tamper data to drafting policies that could help bolster future-oriented investment-induced growth potential.

“It is regrettable that Korea has a data tampering allegation at all, a severe controversy that substantially undermines the trust in state data compiling and analysis,” Lee Chae-woong, an professor of economics emeritus at Sungkyunkwan University, told The Korea Times.

“Korea should guarantee the tenure of the chief of the statistics agency _ a common practice in advanced countries _ that helps public office holders conduct their duties and manage office affairs independently while protecting them against outside political uncertainties.”

The agency's latest move followed a further widened income gap between the haves and the have-nots that was highlighted in this year's first quarterly agency report, a disturbing outcome over which the agency head was allegedly replaced.

The government will abandon the current method in which household spending and income is assessed separately during in-person interviews.

Instead, it will collect ledgers kept by each household, a method scrapped following criticism that high-income earners deliberately underreported their income or refused to answer altogether, thereby dodging taxation.

The change reflects determination that the “troubling” outlook resulted from an increase in numbers of the samples to about 8,000 households from 5,500 a year earlier, which inevitably included many low-income earners and the elderly.

The move to reinstate the old method, which was announced three weeks after the replacement of former agency commissioner Hwang Soo-kyeong, came amid controversy that the Moon administration is “meddling” in what should remain an objective territory unfettered with political influence.

Hwang, who resigned in August, said that she “had not been obedient,” a remark that triggered speculation that Cheong Wa Dae had exerted undue influence to help produce a “face-saving” outcome, following a near 30 percent increase in the minimum wage over the past two years.

Next year's minimum wage is set at 8,350 won, up 10.9 percent from this year's 7,530 won, a 16.4 percent increase from 6,470 won in 2017.

At her resignation speech Aug. 27, Hwang said that she had strived not to use the statistics as a means to suit the current administration, adding credible and independent agency management should be the single most important principle governing state policy and accurate and fair reviews afterwards.

Her successor, Kang Shin-wook, a former senior research fellow at the Korea Institute for Health and Social Affairs (KIHASA), was questioned at the National Assembly hearing in August about the allegation that the health ministry-supervised organization under his leadership “cherry-picked” data in a report to help promote the benefit of a minimum wage hike.

President Moon touted the wage hike saying it had a “90 percent positive aspect” referring to the report. Kang, then director of the Income Security Policy Research, however, denied having written the report.

Park Jae-ha, a senior research fellow of the macroeconomic research division at the Korea Institute of Finance, said political leaders and policymakers should recognize the importance of objective, transparent management of statistics.

“Statistics are the fundamental component in economic policy making, a reason why many of those in power understandably are tempted to 'maneuver' them. But sound economic policy requires data that are both reliable and uncorrupted,” he said.