A number of German investors in Korea have voiced skepticism regarding the new Moon Jae-in administration’s income-led growth economic policies, and to what extent it will lead to increased labor productivity while adding fiscal burdens for businesses.
More than 100 representatives of the Korean-German Chamber of Commerce and Industry member companies gathered together in Seoul last week for the KGCCI half-year economic outlook seminar, according to the chamber’s statement on Thursday.
The members discussed the current economic trends and the future outlook on the Korean economy. The event also included a panel discussion that focused on the potential effects of the economic policies of the Moon government.
“While the policy shift under the new government toward a more people-oriented approach and job creation is well received and supported, businesses were somewhat reluctant regarding the impact of an income-led growth strategy, which is not going hand-in-hand with initiatives to boost productivity of the workforce and innovation,” KGCCI’s statement said.
“They therefore encouraged the government to advance more quickly with their plans for innovation-led growth so that the time gap between raising costs for companies in Korea and increasing productivity will be closed as soon as possible,” the statement added.
Last month the government released its state budget plan for next year that called for 429 trillion won ($381 billion) in spending. The budget proposal marks a 7.1 percent on-year increase, the steepest annual rise in nine years in an effort to push forward with President Moon Jae-in’s people-focused and income-led growth economic blueprint.
Deputy Prime Minister for economic affairs and Finance Minister Kim Dong-yeon has said the government intends to spend money to bring about a paradigm shift in the Korean economy, adding that it was time to start injecting funds and increasing spending in order to minimize mid- and long-term costs.
Some local business groups have voiced concerns over the new administration’s four key economic pillars of job creation, wage increases, innovative growth and creating a fair economy, as they fear potential fiscal backlash, citing how businesses will be burdened by increased labor costs that may lead to possible downsizing.
By Julie Jackson (email@example.com