Time is ripe for structural reforms: finance minister

Strategy and Finance Minister Yoo Il-ho said that Korea cannot afford to hold off structural reforms, stressing that this should not just slip by the public’s attention without merit.

In an email to the employees of the Finance Ministry on Thursday -- the 100th day since his appointment as the country’s top fiscal policymaker, Yoo said that reforms in the public, labor, education and finance sectors are necessary for a country facing limited growth.

“These reforms should not be negated. There was not a single country that rose back up without reforms,” he wrote to his employees.

“The most urgent issue facing us on reforms, corporate restructuring and job creations is (how we can reduce) conflicts of interest with involved parties,” Yoo added.

He continued to say that as with any reform or innovation, it will be difficult to persuade those who have been enjoying power in their comfort zone, but Korea cannot delay and turn reforms into a prolonged plan.

As part of the incumbent administration’s economic policy, the Finance Ministry has been pushing for structural reforms in the four sectors with primary focus on job creations for the young. It has adopted incentive systems awarding employees and executives based on performances at state-run enterprises, and introduced policies for more flexibility in the labor market with a wage peak system.

In the financial sector, the ministry has revised laws allowing nonbanks, such as insurance and securities companies, to conduct foreign exchange transaction business, while trying to boost partnerships between education and companies. The financial sector reforms include allowing the establishment of Internet banks in the digital convergence age.

However, with the conservative Saenuri Party losing a National Assembly majority to progressives The Minjoo Party of Korea and People’s Party, analysts expect the incumbent government to face an uphill battle in passing laws for reforms.

“Reforming Korea’s rigid labor market would help invigorate the economy, but the government’s plans, which, among other things, would reduce protections for older workers, have been met with strong political opposition,” said Moody’s Investors Service in a report.

“Without a parliamentary majority, the chance of their passage is even slimmer than before,” it said.

Minister Yoo said that the government will seek full cooperation from the political parties especially in pursuing labor reforms, as the issue concerning jobs and workforce has become a “matter of politics.”

“There is not one policy the government can create on its own (without support),” Yoo said, adding that he will seek full support from lawmakers through dialogue.



By Park Hyong-ki (hkp@heraldcorp.com)