ED Adjust failing policy

Moon's income-led growth is not working

President Moon Jae-in's core economic policy of driving up household income as the key impetus for economic growth is failing to achieve the intended results.

The latest Statistics Korea reports on the household incomes of the first quarter of this year show there are some serious problems with Moon's “income-led growth” policy, which was designed to spur spending to revive the economy.

The latest surveys show that the incomes of some households have actually been decreasing in the last few months. All in all, a lot of working families are heavily struggling with reduced income amid soaring taxes owing to the wide range of social programs imitated by the Moon administration that have put the increasing tax burden on citizens.

Statistics Korea reported last week that income of the bottom 20 percent bracket dropped in the January-March period. The monthly average of the people in this group decreased to 1.25 million won ($1,054), a 2.5 percent year-on-year drop. This is barely enough to cover the most basic expenses for families. It is worrisome that the household income for the bottom 20 percent group has been declining consecutively for the past five quarters.

One of the biggest reasons for the drop is that many people in this age group work in small businesses or hold irregular positions, which have been hit by Moon's swift push to raise the minimum wage. This has led to pay cuts and loss of job that have barely sustained the livelihoods of low-income earners and the elderly.

Households in the top income range were making 9.92 million won in the same period, down 2.2 percent from a year ago. This is the first drop since the first quarter of 2015.

Amid the slow economy, all income groups are making less. The reduced paychecks are a real problem for all working families because prices and taxes are only getting higher.

With stagnant or reduced wages, more people are voicing their disappointment at President Moon's economic incompetence. Many office workers also feel that taxes have risen noticeably compared with the previous Park Geun-hye administration, and are becoming increasingly concerned about how to support their families in these harsh economic conditions.

The main opposition Liberty Korea Party (LKP) slammed the Moon administration after the Statistics Korea report was published on May 23.

It's time for Moon to accept criticisms that he has not done enough to truly improve the lives of the middle class and the people in the bottom income group.

After two years, it has become increasingly clear that the income-led growth model is not bearing fruit. With limited time left in office, Moon must stop fixating on policies that are not working and make the necessary adjustments. Now is the time to make a major policy shift and focus on measures to create quality jobs and boost the corporate sector.