No Pump-Priming Policies

New Finance Minister Kwon pledges to create more jobs and fair wealth distribution

Deputy Prime Minister and Finance-Economy Minister Kwon Oh-kyu said, in his inauguration speech, that he would not employ any new measures to perk up the economy because the economy is on target to achieve more than 5 percent growth this year. He will focus on measures related to reducing the income gap to create a more equal wealth distribution and also to create jobs during his tenure in office.
He said past policies to create jobs depended on government policies so much that the results yielded were minimal at best. He plans to produce measures to have all major players participate in the effort to create jobs ranging from economic ministries, non-economic ministries and the private sector. He will also relax regulations that govern corporate activities.
He will also spend a lot of time on the structural reform of welfare systems divided into four main sectors, that contain the systems of pensions, health insurance, employment, unemployment, child care, women and senior citizens. He will also reform the social safety net related to employment and unemployment so that it will more efficiently facilitate employment and not just help the needy.
He said if the government takes over a larger burden of traditional social welfare services, it would reduce household responsibilities and enable citizens to spend more time on work dedicated towards society. He said that the allocation of more resources in the welfare sector would help economic growth as well as improve welfare services.
He also pledged that he would devote considerable amounts of time on the improvement of the everyday lives of citizens by doing away with structural problems. He would also concentrate on new necessary policies to lessen suffering.
The new top economic official said he would rely more on market principles and improve the social safety net and at the same time, he would do the same for the integration of society to cope with globalization and the problem of an aging society.
He lauded the achievements of the participatory government led by President Roh Moo-hyun and the Finance and Economy Ministry in managing the economy, which were based on mid-and long-term focuses. Major policy emphases have been placed on structural reform and strengthening rather than short-term effects. They eliminated systematic crisis factors gradually and have put the economy on the course to potential growth, said Kwon.
He went on to say that financial and foreign exchange systems were reformed, along with reforms in budgetary and market systems to put them on an advanced level.
He called for the thorough management of the macro-economy to back up strategies for balanced growth, saying that only a stable economy can support it. He said it is critical that the finance ministry share macro-economic trends with the central bank, which is in charge of interest rates. It is also important that both financial policies and foreign exchange rates be managed in a stable manner.
The ministry claimed that they would pay special attention to risk factors coming from boosts in oil prices and world interest rates to make sure that economic policies for the second half are on track. The creation of jobs is a core factor in the strategy for balanced economic growth, given that employment is key to achieving growth and wealth distribution. The relaxation of business regulations for more free business activities so that businessmen would have desires to do businesses in the belief those businesses can create good-quality jobs. Efforts would also be made to make a better investment climate for both domestic and foreign business firms.
He said he would also lead efforts to upgrade the business environment to the level of advanced countries as soon as possible in light of the fact that Korea is ranked in the range of 20th to 30th in its business environment in the world. Economic and non-economic ministries should work together with other government organizations and the private sector to improve the business environment.
The best policy to cope with globalization and an aging society is to upgrade flexibility in the labor market and reduce dead corners for labor stability. In order to bring that about, the government should act fast to legislate laws for labor relations and those for irregular workers. The government should step up its social responsibility in the areas of childcare, women, the elderly and handicapped to invigorate the labor market.
Liberalization and internalization cannot be avoided since they are a world trend and we have to enhance the competitiveness of our economy since it is related to the survival of our economy, he said.
We now have to find ways to maximize benefits and reduce damages from the free trade agreement with the United States, rather than discussing its overall necessity. nw

Deputy Prime Minister and Finance-Economy Minister Kwon Oh-kyu