South Korean president Moon Jae-in sacked his top two economic officials Friday, the government said, as the world’s 11th-largest economy struggles with slowing growth, rising unemployment and persistent income gaps.
Finance minister Kim Dong-yeon and presidential chief of staff for policy Jang Ha-sung had both been replaced, top Blue House spokesman Yoon Young-chan said in a televised statement.
The pair had reportedly been at odds with each other.
Moon’s global profile has been dominated by his role in the rapid diplomatic rapprochement with nuclear-armed North Korea but at home his handling of the economy has become increasingly controversial, contributing to falling poll ratings.
His administration has steeply raised South Korea’s minimum wages, cut working hours and converted temporary staff to permanent in a series of redistributive moves it says will lead to what it calls ‘income-led growth’.
It is a marked change from the growth model of the past, driven by exports and investments by the South’s major companies, that has seen the South rise to become Asia’s fourth-biggest economy.
And critics say the moves have had the opposite effect to what was intended, worsening the situation of many low-income earners and seeing small businesses cut staff, while big firms hold back investment in the face of tougher regulation.
Last month, the central Bank of Korea cut its growth forecast for this year to 2.7 per cent, down from the 3.1 per cent achieved in 2017.
Unemployment jumped 0.4 percentage points to 3.8 per cent in the third quarter, with youth joblessness at its highest since 1999 at 9.4 per cent.
Jang was the architect of the ‘income-led growth’ policy and wanted to maintain it, while Kim had called for reining it in.
But despite Jang’s sacking, officials indicated the approach would continue.
Government policy would focus on ‘income-led growth, renovation-centred expansion and a democratic economy’, Yoon said, with the aim of creating ‘a benevolent state where all are better off’.
Kim was replaced by Hong Nam-ki, a veteran civil servant, while Jang was succeeded by Kim Soo-hyun, currently Moon’s top social affairs adviser.
‘This does not mean any major policy changes,’ political analyst Choi Jin told AFP.
‘The bickering between the two outgoing officials threatened to spread throughout the government and Moon had no choice but to remove them both.’
Earlier Friday, Moon himself said at a meeting with government officials: ‘We have to be well off together. A fair economy will be the key.’
Sprawling family-oriented conglomerates known as chaebols were instrumental in South Korea’s transformation from war-ravaged ruin to an industrial power.
But as GDP growth has slowed, public frustration with the likes of Samsung and Hyundai has mounted. They are accused of choking off innovation, distorting markets, and engaging in corrupt practices to ensure founding families retain control.
Centre-leftist Moon has vowed to step up measures to monitor the chaebols and stop them exploiting small businesses and subcontractors.
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