문재인 정부의 소득주도성장 정책 평가와 과제
Since taking office last May, President Moon Jae-in has been pushing for income-led expansion as a way to help narrow the wealth gap and achieve sustainable growth in the country.
Experts evaluated the policy and its effect on the Korean economy.
For more on their analysis, we turn to our Kim Hyesung.
Income-led growth, along with job creation, innovative growth, and a fair economy have been the key pillars of President Moon Jae-in's economic policies.
The goal has been to create a virtuous cycle of raising the incomes of the lower-middle class to help boost consumption, raise productivity and reduce the wealth gap.
"The Income growth policy intends to introduce a set of policies which intends to improve the income distribution and in doing so actually achieve higher, more stable economic growth...so it's very important right now to introduce all set of structural policy measures to fundamentally address the income inequality."
Last year, the Moon Administration injected a supplementary budget worth nearly ten billion U.S. dollars to expand employment and welfare programs.
Early this year, the government hiked the hourly minimum wage by 16-point-four percent to about 6 U.S. dollars and 70 cents, for the biggest jump in nearly two decades.
But despite those measures, in the first quarter this year the gap in incomes between the wealthiest and the least wealthy Koreans widened to nearly six times.
According to Statistics Korea, the monthly average incomes of those in the bottom 20 percent income bracket dropped eight percent in the first quarter, making it the steepest decrease since 2003.
Number of newly added jobs dropped on year, and in May the unemployment rate jumped from last year's 3-point-six percent to four percent.
"The minimum wage hike has put a burden on small firms and the self-employed, But it's not the only cause for the worsening wealth gap and sluggish job growth. This has to do with numerous factors, including weak household consumption and a slowing business cycle. Income-led growth is a move in the right direction. What we need are more complementary measures to minimize its negative effects."
Experts say it's still early to evaluate the effects of the income-led growth policy, but they agree that an effective policy mix, including deregulation across various sectors, redistribution policies, tax measures, and public investment will be needed to actually help raise household income, consumption and productivity in the long run.
Kim Hyesung, Arirang News.
