May 08, 2024

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[THE INVESTOR] South Korea’s key economic policy goal for next year is to create jobs and innovate growth, under a mid- and long-term vision to improve the people’s quality of life, the Ministry of Strategy and Finance said on Dec. 27.

The nation’s economy is expected to grow 3 percent next year on the back of a solid global economy and a series of policy measures by the Moon Jae-in administration, while the per capital gross national income will reach the US$30,000 level, according to the ministry.

“This year, (South Korea) has successfully transferred to a people-centered paradigm, seeking to address structural problems such as slow growth and social polarization and to build the foundation for sustainable growth,” said Deputy Minister Lee Chan-woo.

The nation’s economic progress, however, may lack sustainability in the long term, largely due to the discrepancy between the nation’s economic level and its people’s life quality, he added.

The government has recently expressed optimism over the nation’s economic prospects for next year.

“(South Korea) is certain to enter the US$30,000 zone (in terms of per capita gross national income) next year,” Deputy Prime Minister and Finance Minister Kim Dong-yeon said in a press briefing last week.

The country is then to become the third country in the Asia-Pacific area to join the club, following Japan and Australia.

The ministry, along with the Bank of Korea, also predicted that the nation is likely to achieve a 3 percent growth this year, despite pessimistic concerns from part of the private sector.

The average life quality of the people, on the other hand, remained a step behind such economic achievement.

“Korea’s ranking in life quality (among Organization for Economic Cooperation and Development states) has taken a downturn over the past years, despite the increase in its per capita income,” the vice minister said.

“Growth may not be sustainable, unless accompanied by improvement in life quality.”

Korea’s OECD ranking in life quality has dropped from 27th in 2015 to 29th this year, marking a contrast to other member states which generally display a clear correlation between economic growth and life quality, according to the ministry.

The ministry cited President Moon‘s economic slogans -- income-led growth, innovative growth, and fair economy -- as core strategies to address such inconsistency.

Upon such vision, the government plans to implement over 58 percent of its budget spending during the first half of the year, 35 percent of which is to be dedicated to job creation during the first quarter. Also, state-funded companies are to hire some 23,000 new employees next year, over half of which is to be completed during the first six months.

The government will also take measures to respond to the incoming minimum wage hike. Earlier this year, the government said it would provide some 3 trillion won (US$2.76 billion) to back small-sized businesses in dealing with the increased manpower costs.

The nation’s minimum wage is set to climb to 7,530 won per hour next year, up 16.4 percent from the current 6,470 won, marking the largest jump in about two decades. The government‘s plan is to further raise the figure to at least 10,000 won per hour by year 2020.

The government will also seek to promote innovative growth, regarding it as a key to securing the nation’s potentials for sustainable growth, and to establish a fair economic order in the market, according to the ministry.

By Bae Hyun-jung/The Korea Herald (tellme@heraldcorp.com)