Invest KOREA

President Park Geun-hye stressed economic growth and job creation in her speech at the 68th Liberation Day commemoration event last Thursday.

It appears that she reaffirmed her determination to enhance citizens’ lives through economic growth, following the establishment of a framework for sustainable economic development through laws and regulations in the first half of her first year in office.

She also put emphasis on creating an environment in which start-up companies can stimulate the Korean economy and realizing economic democratization in which corporates and small and medium-sized companies can grow together.

◇ Economic Growth is the Top Priority

At her congratulatory speech last week, President Park noted that the Korean government will focus on economic growth and job creation.

It appears that the Korean government will endeavor to stimulate the sluggish Korean economy which posted a 0 percent range QoQ growth rate for nine consecutive quarters and then managed to climb to the 1 percent range in Q2.

The Korean government targeted a year-on-year growth rate of mid-3 percent for the second half of the year, and annual growth rate of 2.7 percent.

The economy is showing signs of recovery, such as higher employment rates amid stable prices and improvement of key indicators in consumption, investment and the mining and manufacturing industries. However, the improvements have been led mostly by the public sector rather than the private sector.

External factors, including the United States’ scaling back on quantitative easing and Japan’s Abenomix, are also negative factors for the Korean economy.

In just a few months since President Park Geun-hye took office, the Korean government introduced ten measures including new real estate policies, revised supplementary budget of KRW 17.3 trillion, investment promotion measures, measures for ventures and start-ups, a roadmap to reach an employment rate of 70 percent, plans for realizing the President’s election pledges and service enhancement measures.

The Korean government plans to support economic growth by reducing real property acquisition tax and introducing the third-phase investment facilitation measures, service enhancement measures by sector, and easing site regulations.

◇ Focus on Job Creation to Achieve Employment Rate of 70 Percent.

President Park also emphasized job creation.

The roadmap to reach an employment rate of 70 percent, which was introduced last June, is the top priority for the Korean government.

Key initiatives including creation of quality part-time jobs and a dual system of job and training will be supported by the government budget. Also, the Korean government is trying to improve employment with a focus on women and the young generation.

President Park’s comments reaffirm the Korean government’s heightened efforts in the second half.

The President also mentioned building a society where workers are evaluated based on their capabilities, not their academic backgrounds.

In a situation where job mismatching is a barrier to increasing the employment rate, the Korean government aims to create a culture in which hiring is based on a person’s capacity and skills.

To this aim, the Korean government will ban government agencies from hiring based on academic backgrounds starting from the first half of next year.

◇ Shared Growth of Corporations and Small and Medium-Sized Companies

President Park proclaimed in her remarks that all economic players should compete fairly and large corporations and small and medium-sized companies should grow together.

The remark seems to address concerns that her determination for economic democratization has weakened. President Park also claimed that she will support Korean companies by strengthening sales diplomacy.

The Korean government expects laying the foundation for fair competition through economic democratization will lead to economic growth and job creation.

Since its establishment, the Park administration has promoted economic democratization which focuses on shared growth between large corporations and small and medium-sized companies.

Laws on economic democratization, including acts on franchise businesses and subcontracting, passed the National Assembly. The ruling party and the opposition also reached an agreement on regulations that prohibit corporations from giving projects only to their affiliates.

There have been arguments surrounding excessive regulations and the government faced strong opposition from the business community. However, the Korean government views economic growth and economic democratization as compatible.

President Park asked for the cooperation and support of the people in overcoming the economic difficulties saying that “small drops of water form a sea”.


Source Text

Source: Yonhap News (Aug. 15, 2013)