hankyoreh

Deputy Prime Minister and Minister of Economy and Finance Kim Dong-yeon speaks at a meeting concerning employment and industry crises at the Central Government Complex in Seoul on Oct. 9. (Yonhap News)

On Oct. 4, the Moon Jae-in administration released a support plan for private investment projects to create jobs in new industries. The plan in question involves creating around 107,000 new jobs through 2022 with 125 trillion won (US$111 billion) in investment chiefly to large corporations working in five areas, including future cars, semiconductors/displays, and new energy industries.

The administration’s aim is to provide support to establish initial markets and address company complaints concerning deregulation, swift granting of approval and permits, and timely provision of industry infrastructure.

But the plan in question is also a virtual carbon copy of the “new industry project investment/job creation road map” announced by the Ministry of Trade, Industry and Energy (MOTIE) following a meeting with top corporation representatives in May, which involved investing 160 trillion won (US$142 billion) to create 200,000 jobs through 2022.

The five new industry areas, project period, and participating businesses are all the same. Yet in just five months, the amount of investment dropped by 35 trillion won (US$31 billion) and the number of jobs to be created was reduced by almost 100,000. The administration explained that “some differences could arise depending on whether the indirect effects of the investment/employment plan are factored in.” But its claim appears unlikely to silence claims that its plan amounts to a rehash – or charges that the administration is simply playing with numbers.

The administration’s new support plan is part of an “innovative growth” policy being spearheaded by Deputy Prime Minister and Minister of Economy and Finance Kim Dong-yeon. With its approach of expanding investment and employment mainly through chaebols, many observers are calling it little different from the failed “creative economy” policies of Park Geun-hye administration.

“If these methods worked, wouldn’t we have already succeeded with expanded investment and employment under the Lee Myung-bak and Park Geun-hye administrations?” groaned a researcher at one state think tank on Oct. 19. The Park administration attempted to generate short-term results by simply channeling Center for Creative Economy and Innovation support to the chaebols – rather than focusing on building a creative economy ecosystem that would allow venture enterprises and SMEs to thrive.

One South Korean semiconductor equipment company seen as boasting outstanding technology was recently approached with a purchase offer from China. The proposed price was stunning: three times the company’s market capitalization. The president of this small business had the opportunity for an immediate payday of close to one trillion won (US$885 million) – but chose to hold out, as he had poured hundreds of billions of won into technology development over the last several decades in the hopes of developing the company into a world leader. Many around him suggested he should face the reality that dealing with Samsung spells a bleak future in store.

“Samsung Electronics may have set a new record with third-quarter operating profits over 17 trillion won (US$15 billion) thanks to the semiconductor boom, but how many cases are there of semiconductor partner businesses that grow to become world-class parts and equipment companies?” asked the head of one private equity fund.

Moon previously pledged to leave behind past administrations’ policy approach of pursuing economic growth mainly through large corporations dependent on exports. It was a response to a situation where the so-called “trickle-down effect” from the corporations to the rest of society has dried up while unfair transactions and power-tripping behavior have proliferated and inequality has deepened. In its place, he proposed a three-pronged “human-centered economy” focusing on income-driven growth, growth through innovation, and a fair economy.

“Innovation growth is not dependent on the chaebols to expand investment and employment,” a Blue House official said.

“The core is about building an innovation ecosystem for SMEs based on a fair economy so that small businesses can earn a fair compensation commensurate to their efforts,” the official added.

But Kim Dong-yeon’s actions to date have consisted of loosening regulations on big business and meeting with chaebol leaders to announce investment and employment plans. In August, President Moon announced that he was doubling down on the income-driven growth policies despite a concerted attack by the opposition citing worsening employment and claims that a minimum wage hike had “failed.”

Since then, signs of actual income-driven growth policies have been in short supply; instead, the policies emphasize “innovation growth” that is almost no different from the Park administration’s “creative economy.” Meanwhile, the constant eruption of conflict and frictions within the economic team over the direction and content of policies has gone unaddressed for a year and a half now. Even as that team’s control tower is teetering, income-driven growth has been tripped up by the minimum wage pothole.

If innovation growth turns into a rip-off of Park Geun-hye’s creative economy, the fears that Moon’s trademark “human-centered economy” will fizzle out may not prove to be unfounded after all.

By Kwack Jung-soo, business correspondent

Please direct comments or questions to [english@hani.co.kr]