Moon sacks key economic policy chiefs
President Moon Jae-in has fired his top economic policymakers as widening criticism of his signature “income-led” growth policy has put the initiative in jeopardy.
Chief presidential press secretary Yoon Young-chan said Friday that Moon had designated Hong Nam-ki for finance minister, replacing Kim Dong-yeon, and named chief presidential social policy secretary Kim Soo-hyun to succeed Jang Ha-sung to oversee overall economic policies.
But the nominations of Hong, a seasoned bureaucrat, and Kim indicated the Moon administration will further strengthen the government’s controversial income-led growth strategy despite increasing calls to revise the strategy amid worse-than-expected economic data.
“The new presidential economic team is tasked to better handle lots of economic issues such as low economic growth and low birthrate, and will reinforce President Moon’s three core economic policies — income-led growth, innovative-driven growth and fair competition,” Yoon said.
The changes came after outgoing Finance Minister Kim called for President Moon’s income-led growth policy to be modified or greatly adjusted, after the government’s recent decision to hike the minimum wage had a negligible impact on households.
Jang, who outlined and designed the income-led growth strategy, defended the policy stance despite fewer-than-expected new jobs and little growth in the incomes of workers.
The government earlier said the policy would raise the minimum wage by up to 30 percent over the next two years and cut the maximum workweek hours to 52 hours.
Initial responses were good — but the government has yet to claim a success because lower-income earners felt the brunt of employers’ decisions to reduce hiring. This darkened growth prospects.
The South Korean economy, Asia’s fourth-largest, is looking bad on many fronts. The economy expanded just 2 percent year-on-year during the third quarter, its weakest pace of expansion since 2009. Economic research institutes cut their forecast for economic growth this year to below 2.8 percent. In the meantime, continued weak job data is forcing the Bank of Korea (BOK) to delay its decision to raise its benchmark key rate despite rate hikes by the U.S. Federal Reserve.
A widening gap in interest rates with the U.S. may induce foreign investors to sell their holdings in South Korean public companies.
Finance Minister nominee Hong has held various posts within the government. He is a former chief of policy coordination for state affairs and an expert in fiscal budget planning, according to Yoon.
The President named Noh Hyeong-ouk, deputy chief of the Office for Government Policy Coordination, as the new head of the office. Kim Yeon-myung, social welfare professor at Chung-Ang University in Seoul, was nominated to be the new chief presidential secretary for social affairs.
Hong Nam-ki Kim Soo-hyun