South Korea may find itself trailing Japan if it continues to delay key reforms that are critical for long-term economic growth, Seoul’s top economic policymaker said Wednesday.
Presiding over a meeting of economy-related ministers in Seoul, Choi Kyung-hwan stressed that the country should take stock of Japan’s policies for growth by spurring private investment.
Japan is widely viewed as a benchmark for South Korea because economic and social situations in the two neighboring countries are similar in many ways.
“Japan has made notable progress in getting rid of lump restrictions in the areas of medical services, tourism and agriculture,” Choi said.
In contrast, efforts to push forward structural reforms in South Korea have met with resistance due to the ineffectiveness of tension-mitigating mechanisms, he said, adding that such problems have made it difficult to resolve differences on key issues between interest groups.
“If such problems are not handled properly, we may face a situation where Japan speeds ahead while South Korea crawls behind,” Choi said.
He made clear that a long-delayed reform bill on civil service pensions must be passed on May 28, while there is a need to take a more careful approach in regards to the national pension program. The latter could tax the country’s ability to meet spending obligations.
The reform bill on civil service pensions centers on getting government workers to pay more premiums and accept lower benefits upon retiring. The move is vehemently opposed by civil servants.
Touching on the issue of youth unemployment, Choi, who doubles as deputy prime minister in charge of economic policy, said the government is willing to offer considerable monetary backing to businesses and institutions that adopt a wage peak system.
This move can lower salaries for senior employees, with the savings being used to hire young workers.
The country’s jobless rate for people between the ages of 15 and 29 stood at 10.2 percent in April, which is much higher than the 3.9 percent national average. (Yonhap)
