Moon sacks key eco­nomic pol­icy chiefs

The Korea Times - - FRONT PAGE - By Kim Yoo-chul yckim@ko­re­

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

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