Economic policies to focus on improving quality of life in 2018

South Korea’s key economic policy goal for next year is to create jobs and innovate growth, under a mid- and long-term vision to improve people’s quality of life, the Ministry of Strategy and Finance said Wednesday.

The nation’s economy is expected to grow 3 percent next year on the back of a solid global economy and a series of policy measures by the Moon Jae-in administration, while the per capita gross national income will reach the $30,000 level, according to the ministry.

“We will focus on creating visible changes for people’s lives and to expand (the nation’s) growth potential,” Deputy Prime Minister and Finance Minister Kim Dong-yeon said at a press briefing on the government’s economic policies for next year.

“What matters as much as the growth rate is to improve people’s quality of life in step with the era of $30,000 per capita gross national income.”

The chief policymaker recently predicted that the country would attain the $30,000 mark in terms of per capita gross national income next year, adding to the government’s optimistic economic forecasts. The country would then become the third country in the Asia-Pacific region to have reached that mark, following Japan and Australia.

“Next year will be the first year for our economy to reach $30,000 per capita GNI, which is a major milestone,” Kim said.

He also gave a positive appraisal of the country’s economic progress this year, citing the Moon administration’s efforts to overcome slow growth and eradicate structural problems.

“Despite various challenges from within and beyond the country, we have achieved the 3 percent growth level for the first time in three years and successfully transferred to a people-centered paradigm,” he said.

To keep up the recent uptrend, however, it is crucial to improve the quality of life and to promote the nation’s growth potential for the sake of sustainable growth, the minister added.

“Korea’s ranking in life quality (among Organization for Economic Cooperation and Development states) has taken a downturn over the past years, despite the increase in its per capita income,” Deputy Minister Lee Chan-woo said at a briefing last week.

“Growth may not be sustainable, unless accompanied by an improvement in life quality.”

Korea’s OECD ranking in life quality dropped from 27th in 2015 to 29th this year, marking a contrast to other member states which generally display a clear correlation between economic growth and life quality, according to the ministry.

The ministry cited President Moon’s economic slogans -- income-led growth, innovative growth, and fair economy -- as core strategies to address such inconsistency.

With such a vision, the government plans to implement over 58 percent of its budget spending during the first half of the year, 35 percent of which is to be dedicated to job creation during the first quarter. Also, state-funded companies are to hire some 23,000 new employees next year, over half of which is to take place during the first six months.

The government will also take measures to respond to the incoming minimum wage hike.

The nation’s minimum wage is set to climb to 7,530 won ($7) per hour next year, up 16.4 percent from the current 6,470 won, marking the largest jump in about two decades. The government’s plan is to further raise the figure to at least 10,000 won per hour by year 2020.

The government will also seek to promote innovative growth, regarding it as a key to securing the nation’s potential for sustainable growth, and to establish a fair economic order in the market, according to the ministry.

“A number of good policies have been announced so far but many have fallen short of full implementation,” Kim said.

“Next year, our top priority will be to realize these policy tasks and to make sure that the people may feel the actual changes.

By Bae Hyun-jung  (tellme@heraldcorp.com)