So what do you do as President when you don’t like the economic statistics? You fire the person giving you the statistics and replace them with someone who will give you statistics you prefer:
Kang Shin-wook
The Moon Jae-in government is facing backlash for replacing the head of its economic statistics agency, whose reports have shown the economy spiraling downward amid hikes in the minimum wage and the government’s income-led growth strategy.
On Monday, lawmakers from opposition parties criticized the Blue House decision on Sunday to replace the Statistics Korea commissioner.
Floor leader of the Liberty Korea Party (LKP) Kim Sung-tae said the person that should be replaced is not the head of Statistics Korea but Moon’s top economic adviser Jang Ha-sung, one of the architects of the income-led growth strategy.
“It’s like scolding a person who shouted ‘fire’ instead of the person who started the blaze,” said the LPK floor leader Kim.
Ham Jin-gyu, head of the LKP policy committee, stressed that the sacking threatens the independence of the statistics agency.
“Statistics Korea is not a department that sets up policy but rather announces statistics,” Ham said. “It’s worrying to think of what future statistics releases will be, considering that the Statistics Korea commissioner is changed just because they are not happy [with the statistics showing the state of the economy].”
On Sunday, the Blue House announced it was replacing the commissioner of Statistics Korea, Hwang Soo-kyeong. This came as a surprise since she only served 13 months in the job, considerably shorter than the average two years of her predecessors.
There is widespread speculation that Hwang lost her job due to the recent unfavorable reports including the worst jobs report in eight and half years and several reports describing a widening income gap between the rich and poor. [Joong Ang Ilbo]
You can read more at the link, but to make this look even worse is the fact that one of the few women in the ROK government was fired and replaced with a male. It will be interesting to see how much the statistics change.
Engagers usually give this answer when I ask this question in class or at conferences. This strikes e as thin and begs the question what how this experience is making N Korea less dangerous to its own people and the world? Why do we care if they learn about more about commerce? https://t.co/JMHOP9MgpX
I think these mom and pop stores have a valid complaint because big businesses can respond to the wage increase by cutting jobs or hours and then automating where necessary. Mom and pop stores may not have the capital available to automate like a bigger business:
Owners of mom-and-pop stores on Friday called on the government to freeze the minimum wage in 2019, claiming rising labor costs will seriously impact their profitability.
If the government moves to raise the minimum hourly wage from the current 7,530 won, the Korea Federation of Micro Enterprise (KFME) won’t accept it, a KFME official said.
The Minimum Wage Commission is required to set the guidelines for next year’s minimum wage level by Saturday. Representatives for labor are demanding a 43 percent increase in the wage to 10,790 won, but small businesses have made it clear that such a step is unacceptable.
Mom-and-pop stores and other modestly sized firms account for 86 percent of the country’s enterprises and hire 36 percent of its total workforce, according to Statistics Korea.
The country’s minimum wage shot up this year, and the Moon Jae-in government is pushing to raise the hourly base to 10,000 won within three years to achieve “income-led growth.”
But local businesses are lukewarm to the idea. There has been a move to let go of workers due to rising costs, with people in their 20s and 30s facing greater difficulties landing jobs. [Yonhap]
How long have we been hearing that North Korea is going to open up just like China?:
Jim Rogers
Legendary investor Jim Rogers said Monday that the world will face serious economic problems over the next few years, but North Korea’s opening will create a huge economic opportunity for South Korea.
The global guru made the remarks during a press briefing in Seoul hosted by major local brokerage Samsung Securities.
“Many of your trading partners are going to suffer. But you have this opening up, and if you remember what happened in China as it opened and changed, that is going to happen here and you will be the major beneficiary,” the American businessman said.
Pointing out that North Korean leader Kim Jong-un spent his early days in Switzerland and has ample knowledge about the outside world, Rogers projected that Kim will surely open up his economy.
“North Korea has lots of disciplined, educated, very cheap labor and a lot of natural resources. And [South Korea] has lots of capital, management ability and expertise,” he said, adding that the marriage of those factors will create synergy effects to make South Korea “the most exciting country in the world over the next 10 to 20 years.” [Joong Ang Ilbo]
You can read more at the link, but what Mr. Rogers seems to forget is that China opened up after the death of Mao Zedong which ended the cult of personality in China. The cult of personality is still alive and well in North Korea with the Kim regime. A Chinese style opening of the economy would threaten the stability of the Kim regime.
Very rarely have I seen President Moon be criticized in the media, but it looks like he is finally facing some heat for his domestic job policies:
South Korea has been trapped in a paradox of employment.
Domestically, the more effort the government makes, the more difficult it is for young people to find decent jobs.
In other words, President Moon Jae-in’s job policies are limiting the creation of new, quality jobs in the private sector.
Last year, Moon implemented a supplementary budget of 11.2 trillion won ($10.5 billion) to create jobs and formulated another extra budget plan of 3.9 trillion won early this month. However, the job market situation has taken a turn for the worse.
The jobless rate reached 4.5 percent in March, the highest level in 17 years. The number of jobs created came to 112,000 from the same month a year ago, sharply down from January’s 334,000.
Internationally, Korea is isolated in its job market recovery.
Many big economies, including the U.S. and Japan, are showing handsome figures in employment, while Korea’s labor market has stayed in the doldrums.
The jobless rate for the U.S. stood at 4.1 percent in March, the lowest level in 17 years. Japan’s unemployment rate was at 2.5 percent in the same month, similar to 2.4 percent in February, the lowest in nearly 25 years.
The employment fiasco for Asia’s fourth-largest economy is the outcome of a toxic mixture of three forces ― Moon’s contradictory policies, market uncertainties and technology.
First, a surge in the unemployment rate is paradoxically associated with Moon’s job policies.
The Moon administration has been trying to take the initiative in job creation rather than encouraging the private sector to hire new employees.
Moon has focused on creating jobs in the public sector by hiring more civil servants and turning irregular workers into regular ones. [Korea Times]
You can read more at the link, but I never did see how adding a bunch of government jobs without a justification for them would help the economy?
It looks like there will soon be a lot of job openings in the government sector of South Korea:
The government has pledged to create 810,000 jobs in the public sector as a means to help young people struggling in the tight job market.
The Presidential Committee on Job Creation unveiled the plan as part of a five-year road map Wednesday.
President Moon Jae-in, who presided over the meeting, said the nation’s top 30 business groups will increase hiring by 5.6 percent this year.
On top of creating more jobs on the public sector, Moon called for private companies to join the campaign to hire more employees.“Hyundai Motor converted 7,000 subcontractors into regular workers.KT, Hanwha, POSCO and Doosan Group will also join the campaign to create more jobs,” he said.
Moon said the government will support innovative companies that actively hire more young people.
Under the plan, the government will create 340,000 jobs in the social services sector.It will start by adding 170,000 jobs in child care and nursing this year, for which there is a high demand.
An additional 170,000 positions will be created in the culture, sports and environment sectors.
The government will add 100,000 more police officers, 74,000 position in firefighting, social welfare and livestock disease control, and 174,000 in local-level civil servants. [Korea Times]
You can read the rest at the link, but the ROK government has no funding plan for this hiring spree which means it will likely just be deficit spending.
I have always thought that South Korea is sitting on a massive real estate bubble considering all of its empty apartments that so many people have borrowed money invested in. According to this article the debt problems in South Korea is far worse than just the real estate market:
One of the important aspects that gets missed about Korean exports is their overall lack of diversity. About 48 percent of all Korean exports consist of electronics and related components while 31 percent are transportation goods (cars, boats, and related parts). A game-changing shift in the playing field for any product area could spell a slow but steady downward spiral for the entire Korean economy. Even a 10 percent drop in exports would literally shrink the economy by 5 percent, costing tens of thousands of jobs that ultimately depend on export revenue, exacerbating the already high underemployment rate of 14 percent and youth unemployment rate of 9 percent.
With a retinue of Chinese firms like Huawei and Oppo hot on the heels of Samsung, a potential decline becomes even more plausible considering the fact that Korean corporate culture is not always the most favorable for fostering the development of next-generation ideas and technology, often the easiest (and sometimes only) way for technology companies to remain competitive. This lack of forward thinking is most striking in the clean energy field, where Korea has been completely left out of the latest developments, despite its global reputation for being a technology powerhouse.
Another key area of concern is corporate debt. South Korea’s total corporate debt is worth about 171 percent of its GDP. Although this high percentage is not unique to Korea (the U.S. and China have about 304 percent and 169 percent, respectively), Korea is more susceptible to adverse consequences for a number of reasons. The first is the high prevalence of “zombie companies,” corporate entities that have been unable to repay debt for at least three years running. It is estimated that about a quarter of all Korean corporate debt is held by zombie companies, unlikely to ever be repaid. [The Diplomat]
Obviously the sanctions put on North Korea are not working when Dr. Andrei Lankov writes about the large economic expansion Kim Jong-un has helped to usher in during his first five years of ruling North Korea:
Next month it will be five years since the sudden death of Kim Jong-il led to the second dynastic transition in North Korean history. Kim Jong-un’s reign is approaching the five-year mark, the length of a presidential term in many modern democracies, so it is probably a good time to say what we think of the young North Korean leader.
To an extent, we can see the directions that Kim Jong-un wants to take and the trajectory that he wants to steer his country toward. I would dare to describe Kim Jong-un as a modest, perhaps hyper-cautious, but rather determined reformer in economic matters. Unfortunately, his foreign policy is difficult to appraise in anything but a critical fashion: it is quite likely that, in the long run, his diplomatic blunders will be his undoing.
But let’s start with the good news. In the last five years the North Korean economy has grown faster than any time since the early 1980s. Economic statistics are murky, speculative and controversial, but the majority of inside observers (diplomatic staff in Pyongyang) tend to estimate growth as being 3 percent to 4 percent per annum. This is much better than anything North Korea has seen since the 1980s, if not the 1970s. The results of such growth are felt through the whole of society, though the results are highly unevenly distributed. [Korea Times]
It is amazing how interconnect the world has become when Britain leaving the European Union is having financial ripple effects across the entire world to include in South Korea:
Korea’s stocks and currency plunged as investors panicked over the possible fallout of Britain’s surprise vote to exit from the EU, dealers said.
Analysts said growing uncertainties on global financial markets, triggered by the Brexit, will overshadow the sluggish Korean economy. They ruled out any immediate huge direct impact on the real economy, but said it will weaken overall investment and consumer sentiment.
The benchmark KOSPI closed down 3.09 percent at 1,925.24 points. The tech-loaded KOSDAQ market plunged 4.76 percent to 647.16.
The won tumbled, closing at 1,179.9 won against the dollar, losing 29.7 won from the previous day.
Analysts said the Seoul stock market will remain weak for the time being on growing uncertainties in global financial markets. [Korea Times]
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