Minimum wage hike, 52-hour work week mark key economic policies in 2018
- 5 years ago
It's that time in the newscast where we take a stroll through the memory lane that was 2018.
The local economy was a story we just couldn't omit from our list as there was so much going on.
Income-led growth, innovative growth and creating a fair economy came to the fore in 2018.
Three of the key economic policies of the Moon administration.
Income-led growth policy in particular has gained momentum this year, represented by minimum wage hike and 52-hour workweek.
Our Kim Hyesung has the details.
In 2018, the Moon Administration raised the minimum wage... and passed a measure to limit the work week to 52 hours... as part of its drive to create an inclusive society where growth is more evenly distributed and more sustainable.
The minimum hourly wage was raised by 16-point-four percent to about six U.S. dollars and 50 cents, the biggest jump since 2001,... to help boost the domestic economy by raising household income and spending... and by increasing investment and production.
The 52-hour work week also went into effect in July.
The maximum workweek was shortened from 68 hours to 52 to help improve work-life balance, potentially create more jobs and raise productivity.
Korea's work culture is notoriously demanding -- its working hours are the third longest in the OECD.
But despite those measures, sluggish job growth and a widening income gap raised questions about the effectiveness of income-led growth.
In the third quarter, the average income of the nation's top 20 percent was 5-point-five times that of the bottom 20 percent, the highest in 11 years.
"For the minimum wage hike to help boost domestic growth, there needs to be an increase in job creation to raise disposable incomes. But the wage hike had a negative effect on job creation because it increased the payroll burden on small businesses. Slower growth in the manufacturing sector didn't help either."
Amid a growing backlash over the income-led growth policy, a new finance minister took office in December, vowing to continue pursuing policies for innovative growth and a fair economy... to nurture investment in new industries like smart factories, 5G and AI. But, he said, there would be some policy changes.
"We will strengthen support measures for the self-employed. And when calculating the minimum wage, we will also take into consideration its acceptability to the market, whether employers can afford it and the economic ripple effects it might have."
Policymakers are working on changes to both the minimum wage hike calculation and the 52-hour week, which are expected to be finalized by February.
But experts say that for income-led growth to be effective, regulatory reform will also be needed to spur investment and jobs.
Kim Hyesung, Arirang News.
The local economy was a story we just couldn't omit from our list as there was so much going on.
Income-led growth, innovative growth and creating a fair economy came to the fore in 2018.
Three of the key economic policies of the Moon administration.
Income-led growth policy in particular has gained momentum this year, represented by minimum wage hike and 52-hour workweek.
Our Kim Hyesung has the details.
In 2018, the Moon Administration raised the minimum wage... and passed a measure to limit the work week to 52 hours... as part of its drive to create an inclusive society where growth is more evenly distributed and more sustainable.
The minimum hourly wage was raised by 16-point-four percent to about six U.S. dollars and 50 cents, the biggest jump since 2001,... to help boost the domestic economy by raising household income and spending... and by increasing investment and production.
The 52-hour work week also went into effect in July.
The maximum workweek was shortened from 68 hours to 52 to help improve work-life balance, potentially create more jobs and raise productivity.
Korea's work culture is notoriously demanding -- its working hours are the third longest in the OECD.
But despite those measures, sluggish job growth and a widening income gap raised questions about the effectiveness of income-led growth.
In the third quarter, the average income of the nation's top 20 percent was 5-point-five times that of the bottom 20 percent, the highest in 11 years.
"For the minimum wage hike to help boost domestic growth, there needs to be an increase in job creation to raise disposable incomes. But the wage hike had a negative effect on job creation because it increased the payroll burden on small businesses. Slower growth in the manufacturing sector didn't help either."
Amid a growing backlash over the income-led growth policy, a new finance minister took office in December, vowing to continue pursuing policies for innovative growth and a fair economy... to nurture investment in new industries like smart factories, 5G and AI. But, he said, there would be some policy changes.
"We will strengthen support measures for the self-employed. And when calculating the minimum wage, we will also take into consideration its acceptability to the market, whether employers can afford it and the economic ripple effects it might have."
Policymakers are working on changes to both the minimum wage hike calculation and the 52-hour week, which are expected to be finalized by February.
But experts say that for income-led growth to be effective, regulatory reform will also be needed to spur investment and jobs.
Kim Hyesung, Arirang News.