As economy struggles, S-Korea's President sacks Finance Minister, Policy Chief
South Korea's President Moon Jae-in sacked his top two economic officials today, the government said, as the world's 11th largest economy struggles with slowing growth, rising unemployment, and persistent income gaps. Finance Minister Kim Dong-yeon and Presidential Chief of Staff for Policy, Jang Ha-sung, have both been replaced. The pair had reportedly been at odds with each other over how to address the situation.
As an aftermath of economic struggle, the Central Bank of Korea, last month, had cut its growth forecast for 2018 to 2.7%, down from 3.1% achieved in 2017. Unemployment jumped 0.4 percentage points to 3.8% in Q3, with youth joblessness at its highest since 1999 at 9.4%. Kim called for redistributive policies to be rowed back, while Jang wanted to stick with pursuing equality.
Acting on the tiff between Kim ang Jang, Moon replaced Kim with Hong Nam-ki, a veteran bureaucrat, while Jang was succeeded by Kim Soo-hyun, currently Moon's top social affairs adviser. Notably, Moon's administration has steeply raised South's minimum wages, cut working hours and converted temporary staff to permanent in a series of redistributive moves it says will lead to what it calls "income-led growth".
It's a marked change from the previous growth model, driven by exports and investments by the South's major companies, that has seen it rise to become Asia's fourth-biggest economy. However, critics say the moves have had the opposite effect, worsening the situation of many low-income earners and seeing small businesses cut staff, while big firms hold back investment in the face of tougher regulation.
Some international study experts say Moon's, the 19th President of S-Korea, global profile has been dominated by his role in the rapid diplomatic rapprochement with nuclear-armed North Korea, but at home his handling of the economy has become increasingly controversial, contributing to falling poll ratings.