BOK becomes more vocal about socially divisive issues
Bank of Korea Governor Rhee Chang-yong / Yonhap
The Bank of Korea (BOK) has undergone a notable shift in research priorities under the leadership of Governor Rhee Chang-yong, no longer hesitating to confront the decades-long challenges of extreme social disparity.
Previous reports from the BOK were limited primarily to the impact of financial policies, data analysis, market research and development monitoring. However, a recent report made a contentious suggestion of paying foreign workers in the caregiving sector less than minimum wage.
The recent wave of BOK-commissioned reports exemplifies the ongoing realization of Rhee’s mantra, "Noisy BOK," signaling a newfound identity for the central bank. The transformation moves away from a culture of silence long cultivated over the years, especially during the tenure of Governor Lee Ju-yeol, Rhee’s predecessor. The organization maintained a low profile at the time.
“The governor pledged to make BOK a ‘noisy’ organization at his inauguration in April 2022, and a lot has changed since then,” a BOK official said.
Bank of Korea Governor Rhee Chang-yong, right, and Korea Development Institute (KDI) President Cho Dong-chul talk during a seminar co-hosted by the two institutions, Seoul, March 4. Yonhap
In a March 4 report, the central bank proposed exceptions from the blanket minimum wage rule for workers in the caregiving industry.
During a seminar co-hosted by the BOK and the Korea Development Institute the same day, the central bank recommended a drastic reduction in the hourly minimum wage for foreign caregivers. Rhee emphasized the measure would enhance the country’s long-muted labor productivity and address labor shortage in the sector amid a low birthrate.
Rhee countered the concerns raised by some critics, who suggested that the discrimination in minimum wage for foreign workers might result in an overall reduction in income for minimum wage workers.
“The issues should be addressed within the framework of offering a range of price-varying options in a market characterized by vast differences in service quality,” he said during the seminar.
“Discussions hindered and gridlocked by potential pushbacks must not lead to the conclusion that government assistance would ultimately bear the costs,” he added.
The notably radical policy recommendation has elicited strong reactions. While the country's two umbrella labor groups have demanded immediate apologies from Rhee, business groups have praised his "firm grip on reality."
The issue was on the agenda of the the employment ministry-supervised Minimum Wage Committee in 2021. However, it concluded without meaningful progress due to opposition from labor. Similar attempts to revise the law governing the wage of caregivers also faltered last year, due to protests from both labor and civic groups.
The central bank is expected to issue a report on the country’s education reform, another controversial issue, in the second quarter.
Critics argue that the central bank's increased focus on socially and politically charged subjects may come at the expense of its double mandate of maintaining price stability and financial stability.
Korea continues to grapple with persistent inflation, notably in the prices of fresh food. Statistics Korea data released Tuesday showed a staggering 40.6 percent increase in the prices of fruits and vegetables last month. The stark contrast to the headline inflation of 3.1 percent marks the widest in 40 years.