Chaebol shadow may lift under S. Korea president’s jobs plan
SOUTH Korean President Moon Jae-in rode into office railing against the scandal-plagued chaebol including Samsung Group and Lotte Group that dominate the economy.
In a nation where the 10 biggest conglomerates own more than a quarter of all business assets, Moon pledged a focus on smalland medium-sized enterprises to help him meet a goal of creating 500,000 jobs in the private sector. That’s exactly what little guys like Seondo Electric Co. – a maker of switchgears, vacuum circuit breakers and control systems – want to hear.
“Providing support to the SMEs was one of the policy pledges that the president made during his campaign,” said Choi Sung-jin, a spokesman for the Ansan-based company with 189 workers. “While past governments have tried and failed, we believe the new government will be able to carry this through because he is seen as being closer to the common people than the privileged.” Moon’s task got a bit harder last Thursday after the unemployment rate for young people in April rose to 11.2 per cent, compared with 10.9 per cent a year earlier. The primary drivers of that increase were unemployed university graduates, who flooded the market as conglomerates restructure in the aftermath of scandals that helped land Moon in the top job to begin with.
The overall unemployment rate increased to four per cent, compared with 3.7 per cent a year earlier. On his first day in office last Wednesday, Moon said job creation was his No. 1 task. He unveiled several measures intended to get more people working, including setting up a presidential jobs committee and appointing a jobs czar. On Friday, the Finance Ministry said the government will implement a supplementary budget and other policies to create jobs and stimulate the economy.
While the 10 biggest chaebol traditionally have steered the economy, Moon can’t count on them to hire at home. With sluggish economic growth in their domestic market, companies such as Hyundai Motor Co. increasingly are looking overseas.
The nation’s biggest auto maker produced about 46 per cent of its vehicles in South Korea last year, down from 60 per cent in 2010, according to data compiled by Bloomberg. “The stranglehold that chaebol have on the rest of
While past governments have tried and failed, we believe the new government will be able to carry this through because he is seen as being closer to the common people than the privileged. Choi Sung-jin, a spokesman for the Ansan-based company
the economy doesn’t allow SMEs to flourish,” said Justin Jimenez, a Bloomberg Intelligence economist. “That puts a ceiling on those businesses’ ability to hire.” Moreover, antichaebol sentiment is running high among the populace. An influence-peddling scandal led to the impeachment of his predecessor, Park Geun-hye, and the indictment of Jay Y. Lee, vice- chairman of Samsung. Both have denied wrong- doing.
In a separate case, some Lotte Group family members face criminal charges ranging from embezzlement to fiduciary breaches amounting to about 280 billion won ( RM1.1 billion). They also have denied wrong- doing.
During his campaign, Moon called for an end to the “chaebolfocused growth strategy,” blaming it for low wage growth and joblessness. The Bank of Korea projects economic expansion of 2.6 per cent this year. The median of estimates compiled by Bloomberg is for 2.5 per cent growth, a decline from 2.8 per cent last year.
That makes SMEs, defined as companies with less than 300 workers, central to his revitalisation plans. They employ about 14.3 million people, or about 85 per cent of South Korea’s workforce, the labour ministry said in December.“The time for SMEs has come,” the Korea Federation of SMEs, which represents about 570 businesses, said in a statement. “Economic growth should be centered on SMEs that could drive innovations and job creation.”
During his campaign, Moon promised to support the renewable- energy sector and steadily reduce the country’s reliance on nuclear-power plants. That could give a boost to S-Energy Co., a producer of solar modules that employs 167 people at two domestic factories. — WPBloomberg