SEOUL • President Moon Jae-in’s income-led growth campaign will harm South Korea’s economy next year by weakening job creation, according to a majority of economists surveyed by Bloomberg.
More than three quarters of the 30 experts polled forecast employment growth will slow as the government pushes ahead with an 11% hike in the minimum wage, adding to the 16% increase in 2018.
Yet, about a third of respondents expect that higher pay will eventually help the economy by raising people’s incomes and boosting consumer spending.
Moon’s labour-market policies are blamed by some economists and lawmakers for pushing up unemployment at a time when economic expansion is sputtering and risks to exports abound.
Last month, Moon axed his finance minister and his policy chief to stop his administration sending mixed signals over the effectiveness of the policy. The jobless rate this year has hovered close to its highest levels since the global financial crisis.
The survey also showed that a third of economists rank the trade war as the biggest risk to South Korea’s economy in 2019, followed by fears over a slowdown in China or the global economy.
Others expressed concern about weakness in semiconductor exports. They are almost evenly split on whether the Bank of Korea will raise interest rates again by the end of next year.