SEOUL • In a move to defend his controversial income-led growth policy, South Korean President Moon Jae-in has pledged steps to produce tangible results that will improve people's lives while narrowing the income gap.
In a New Year's address yesterday leaning heavily on economic issues, Mr Moon promised more investment in strategic, innovative industries, more help for businesses affected by rising wages, and greater efforts in job creation.
The objective is to enable people to see clear signs in their lives that "the government's economic policy is heading in the right direction", he said in a televised speech. "Tangible outcomes must be produced."
Hurt by the global economic downturn, trade war and weak investment, South Korea's export-reliant economy, is expected to grow between 2.6 per cent and 2.7 per cent last year and this year. This is lower than earlier projected figures of 2.9 per cent for last year and 2.8 per cent this year.
The labour-friendly Moon administration has been pushing to invigorate the economy by raising wages to boost household spending, a policy that has drawn harsh criticism from the opposition.
The minimum wage has already spiked nearly 30 per cent from 6,470 won (S$8) per hour in 2017 to 8,350 won this year. But this has forced many small businesses to fire part-time workers to reduce labour costs.
Mr Moon said despite the challenges to the economy, it is important to continue the strategy.
"An economic policy shift can be truly frightening. It will take time and may generate controversy," he said. "However, it is the path that we must take. We will achieve the goal of an innovative, inclusive nation by all means while sufficiently making up for any shortcomings."
South Korea is not alone in trying to address concerns over growing income inequalities, he said. "Our goal is to create an economy in which all prosper together on the basis of a fair economy with a level playing field, where innovative and income-driven growth enable sustainable development."
Noting that job creation has been limited due to sluggish growth, Mr Moon vowed stronger emphasis on increasing job opportunities and helping those unemployed.
The country's jobless rate of 3.8 per cent is the highest since 2001. The number of people employed grew by only 0.4 per cent from a year earlier, the lowest year-on-year gain since 2009.
He said: "My administration is taking this situation seriously. However, I want to emphasise that the hardships we are suffering now are even stronger proof of the need for the people-centred economy."
Efforts to build peace on the Korean Peninsula, which sees Mr Moon playing a mediating role between the United States and North Korea in denuclearisation talks, can also help spur growth, he said.
Inter-Korea economic cooperation, as well as the building of roads and railway linking the two Koreas, will "help find new breakthroughs for our economy", he said.