Economic policies center on boosting job creation, quality of life in 2018

By Yonhap

Published : Dec. 27, 2017 - 15:09

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South Korea will implement its economic policy next year to boost job creation and innovative growth, which will help improve quality of life, while laying the foundation to tackle the country's chronic low birthrate and maintain a decent economic expansion over the mid-to-long haul, the finance ministry said Wednesday.

The economy is expected to grow at around 3 percent next year, following this year's estimated 3.1 percent expansion, on the back of the solid global economy and a series of policy measures, according to the ministry.

The finance ministry said job-creating sectors and firms will receive an array of tax and other benefits, while the government will draw up more measures to help facilitate local firms' hiring of more women.

The government plans to implement over 58 percent of its budget spending during the first half of next year to help the economy grow. In particular, the government plans to spend some 35 percent of its budget earmarked for job creation in the first quarter of next year, and state-funded firms will hire some 23,000 next year, over half of which will be recruited during the first half.

Backed by solid economic growth and a rise in income, South Korea's per-capita gross domestic product is widely forecast to surpass $30,000 in 2018, the ministry said.

South Korea would become the third country in Asia to achieve the landmark after Japan and Australia, and ninth among the members of the Organization for Economic Cooperation and Development.

Job seekers look at signboards at a job fair in Daegu, South Korea, on June 29, 2017. (Yonhap)

The government will also take measures to cushion potential fallout from a hike in the minimum wage set to be implemented next year.

Earlier, the government said it would provide some 3 trillion won ($2.76 billion) in aid to help small businesses deal with the minimum wage hike.

The minimum wage is set to rise to 7,530 won ($7) per hour next year, up 16.4 percent from the current 6,470 won. It marks the biggest jump in about two decades.

Although the minimum wage hike is one of the government's strategies to boost private consumption and narrow the income gap, small and medium-sized businesses have expressed concerns about higher labor costs.

The government is determined to further raise the minimum wage in Asia's fourth-largest economy to at least 10,000 won by 2020 on the belief that it is time to break the economy away from an export-dependent growth path. Policymakers have emphasized that the average household should earn more and the government must strive to offer quality jobs with good pay.

The government will also seek to boost innovative growth, which it claims would help Asia's fourth-largest economy secure its potential growth and a sustainable expansion.

To finance their innovative steps, the government will offer a variety of tax incentives to the Kosdaq-listed firms and state pension funds will expand their exposure to them, according to the ministry.

The ministry said the government will also root out unfair business practices among suppliers to promote a "fair" economy. Earlier, the Fair Trade Commission (FTC), the country's corporate watchdog, vowed to carry out sweeping reforms to root out unfair business practices and strengthen consumer protection.

The FTC said it would impose punitive damages of up to three times the actual losses incurred by illegal business practices, such as unfair payment, returns and cutting back supplied goods, that occur between large shopping mall operators and smaller partners.

Also, the government will work to improve the corporate ownership structure and beef up shareholders' rights, as well as curb group owners' influence on affiliates.

The ministry said there are also headwinds for the local economy -- rate hikes, growing trade protectionism and oil price volatility.

In November, the Bank of Korea hiked the base rate by a quarter percentage point to 1.5 percent amid clear signs of an economic recovery, snapping the 16-month run of its wait-and-see stance. The U.S. Federal Reserve is also widely expected to continue its tightening mode into next year as well.

The rise in market interest rates is feared to put more burden on heavily indebted households and curb companies from making aggressive investments.

The government will also improve household debt's structure in the face of a rise in market interest rates by raising the portion of fixed-rate debts extended to households.

The finance ministry said it will also unveil a set of measures or strengthen existing ones to boost the country's low birthrate, which is deemed one of the key challenges to Asia's fourth-largest economy.

The government will also beef up international financial cooperation, as well as manage international financial market risks, and expand trade ties with other countries to cope with rising global trade protectionist moves, such as import regulations. (Yonhap)

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Economic policies center on boosting job creation, quality of life in 2018

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