Tag: economy

Anyone surprised that the Moon administration is blaming the poor Korean economy on the coronavirus? They are basically arguing that the Korean economy was on the verge of turning around until the coronavirus hit:

President Moon Jae-in ordered his cabinet on Tuesday to mobilize all available “special” means to handle the “emergency economic situations” attributable to the continued spread of the new coronavirus.

“Emergency situations require an emergency prescription. The current situation is much more serious than [we] thought,” Moon said during his opening remarks during a weekly cabinet meeting at the Blue House. “It is the time when special measures are absolutely necessary to use every possible means that the government can mobilize.”

Moon’s call reflects his resolve to minimize the epidemic’s impact on the Korean economy, which the government said was on the cusp of revival starting in the last quarter of 2019.

“This is not enough,” he added. “In order to respond to the emergency economic situations, I want you to exert policy-related imagination that goes beyond expectations with no restrictions.”

He cited the expansion of tax incentives and regulatory reform to promote corporate investment, special financial support for small- and medium-sized firms and measures to relieve tiny shop owners of rent burdens.

Joong Ang Ilbo

You can read more at the link.

Anyone surprised by this? I hope not because it is simple math that employers would cut back on employees if labor costs became too expensive due to forced minimum wage increases. This is especially true for all the mom and pop shops you see in South Korea:

The steep increase in the minimum wage caused 42,000 full-time jobs in convenience stores to disappear in 2018 as they were unable to pay the increased salaries, the Korea Association of Convenience Store Industry said Tuesday.

According to the association, the average number of jobs available per convenience store plummeted to five, down from 5.8 in 2017. The number of full-time staff who worked more than three to four days per week and received monthly wages fell from 2.3 to 1.1.

Chosun Ilbo

You can read more at the link, but young people in South Korea are already having a hard time finding a job and now even a convenience store job is harder to get.

Korea’s economic news continues to get worse:

Korea’s exports will likely decline by 10.2 percent this year from the previous year, according to the Korea International Trade Association (KITA).

The trade lobby said in a report Thursday that it expects outbound shipments for this year to record $543 billion due to global trade friction and tumbling semiconductor prices, making it fall far short of the record milestone the country achieved last year of $604.9 billion.

Exports have recorded on-year declines since December last year.

“Exports will drop by around $60 billion compared to last year, and around $30 billion [of the drop] is due to semiconductor prices that have fallen by 40 percent,” said KITA CEO Kim Young-ju during a briefing at the KITA headquarters in Gangnam District, southern Seoul. “On top of this, petrochemical prices fell 10 percent from the previous year due to falling global crude oil prices.”

Joong Ang Ilbo

You can read more at the link.

The Chinese government must be feeling some economic pain if they are now resorting to pushing nationalism to defend themselves:

Among China’s most surprising responses to the trade war has been its reluctance to use its vast state media empire to rally the home front. That’s changed since U.S. President Donald Trump’s latest tariff barrage.


In recent days, the once-banned phrase “trade war” has roared back into widespread use in Chinese media. Meanwhile, official news outlets gave high-profile play to commentaries urging unified resistance to foreign pressure, including an editorial from the nationalist Global Times calling the trade dispute a “people’s war” and threat to all of China.

Such sentiments have found an eager audience, with a state television video vowing a “fight to the end” attracting more than 3 billion views since Monday. The clip was the most-read piece on China’s Twitter-like social media platform Weibo earlier Tuesday.

The rhetorical shift underscores the risks that China’s Communist Party veers toward a more nationalistic position as the trade war drags on and weighs on economic growth. Chinese President Xi Jinping, like Trump, has promised to rejuvenate his country and can’t afford to look weak in the face of foreign power.
So far, China’s state media have sought to tamp down the kind of patriotic passions that fueled a backlash against Japanese interests when a territorial dispute flared in 2012. Even now, state media commentaries focused the blame on the U.S. government, rather than the country as a whole.
For instance, a commentary published in the Communist Party’s flagship People’s Daily newspaper, avoids any mention of Trump’s name and refers only to “certain people in America who brood over the so-called massive trade deficit,” said David Bandurski of the China Media Project, an independent research program affiliated with the University of Hong Kong.

Bloomberg

You can read more at the link.

The Moon administration’s response to their poor economic policies appears to be to just spend more money:

President Moon Jae-in ordered the government on Thursday to spend more aggressively to solve problems such as slowing growth, weak jobs and worsening demographic changes.

“There are many areas in which we are still inadequate where people could feel improvements in the overall quality of their lives,” Moon said during a government national fiscal strategy meeting in Sejong. “There’s a need for the [government] finances to take a bolder role, more than ever, in urgently solving our society’s structural problems from low growth, polarization [of the top and bottom tiers], jobs, low fertility rate and aging population.” 

Although this is the third meeting held under the current administration, it was the first time that the meeting was held in Sejong instead of at the Blue House. 

“We’re at a turning point where we have to look back on our achievements in the last two years and prepare for the remaining three years,” Moon said. 

Moon particularly stressed that low-income people outside of the employment market, such as those who run small businesses like restaurants and convenience stores, need help.

“Self-employed people and those in lower-income households are struggling the most and this hurts me,” Moon said. “There is a demand for a more aggressive fiscal role in expanding jobs, enhancement on job safety nets such as introducing a system where additional financial support is provided for those whose unemployment paychecks has ended and measures for self-employed businesses.”

Joong Ang Ilbo

You can read more at the link, but the whole reason small businesses are struggling and unemployment is up is because of the steep minimum wage increase that has raised labor costs and caused major job layoffs.

Due to the slow economy more Koreans are turning towards learning trade skills than trying to pursue white collar jobs:

A growing number of people of all ages are learning blue-collar skills like building maintenance and landscaping, even if they have degrees from top universities or have previously worked for big conglomerates. 
The reason is that they feel that blue-collar jobs offer more job security than office work in a recession. 
At the city-run Seoul Institute of Technology and Education, the most popular class just five years ago was cooking, favored by people who wanted to open their own restaurants. But now it is landscaping and grounds-keeping, perhaps because there seems to be a growing appetite from condos and municipalities for clean, well-designed open spaces. 
Building and electrical maintenance are also in high demand. Courses are free and last from six months to a year . 
Choi Sung-cheol, an instructor at the institute, said, “In tough economic times the popular classes are not entrepreneurship but skills that guarantee work past the average retirement age.”

Chosun Ilbo

You can read more at the link, but I think it is good that more people are learning trades. Going to college and working a white collar job is not for everyone and many trades do offer a good income.

The New York Times has taken notice of how progressive policies that have been championed in the US have not worked in South Korea:

INCHEON, South Korea — As President Trump leads a drive to slash taxes and pare back regulation, one major economy is taking a different approach. 
Under President Moon Jae-in, South Korea has raised taxes and the minimum wage in the name of economic growth. So far, it hasn’t worked out as planned.
Growth has slowed, unemployment has risen and small-business owners like Moon Seung are complaining. Mr. Moon, founder of an auto parts maker called Dasung in Incheon, an industrial town near Seoul, says his labor costs were up an extra 3 percent last year after the minimum wage rose to 7,530 Korean won, or about $6.70, an hour. That may not sound like much, but it ate into his razor-thin profit margin and prompted him to stop hiring.

“We can’t take it,” Mr. Moon said. “This is a problem not just for the employers, but for the employees.”

NY Times

You can read the rest at the link.

This was never going to go well and it seems President Moon has finally realized this:

Anchor: President Moon Jae-in has acknowledged problems of his key economic policies, calling for ways to break the shock of minimum wage hikes and reduced work hours. This comes as the government forecasts the economy will be sluggish next year as well.
Kim In-kyung has the details.

Report: The government has decided to revise the minimum wage decision-making system by February and implement it from 2020, adjusting its pace of increase. It will also spend a record-high 61 percent of its budget in the first half of the year in 2019. 

KBS World Radio

You can read more at the link.

This news is about as surprising as North Korea maintaining missile bases:

Small and mid-sized companies are laying off workers ahead of another 10.9-percent hike in the minimum wage in January to stay afloat.

According to the Korea Employment Information Service, a total of 497,314 workers were laid off by small and mid-sized companies and applied for unemployment support in the third quarter of this year, up a whopping 37,710 compared to the same period of 2017.

This was the biggest rate of increase for the third quarter since the government started tallying statistics in 2010. Over the same period, 110,000 workers were laid off by big businesses, up 14 percent. That means the government has handed out W5.5 trillion in unemployment support in the first 10 months of this year, already surpassing last year’s total of W5.02 trillion (US$1=W1,130).  [Chosun Ilbo]

You can read more at the link.

Today's example of oxymoron: A North Korean economist https://t.co/ae0GgbtHoz

— NK Cantab (@nefornkhr) October 30, 2018