CANBERRA: Public support for South Korean President Moon Jae-in has plummeted. Peaking at 83 per cent following his agreement with North Korean leader Kim Jong Un to end the Korean War, his approval rating has crashed to 49 per cent — the lowest since he took office.
The biggest reason for this drop is South Korea’s weakest job growth in nearly nine years: The economy added just 5,000 new jobs over a year earlier, the smallest annual gain since January 2010 amid the global financial crisis.
Despite Moon’s pledge to become a “jobs president”, he has failed to turn South Korea’s unemployment crisis around while also failing to improve economic growth which is forecast to be just 2.8 per cent this year.
READ: South Korea's 'Jobs President' faces policy roll-back over employment uproar
MOON’S POLITICS CLEAN UP
Moon has been trying to clean things up politically. His signature reform of “past accumulated evils” not only augmented the dominance of the Blue House but also led to sweeping changes in his government’s leadership.
Moon has replaced those contaminated by the old “evils” with new and proven individuals — predominantly former activists in the pro-democracy movement and civic organisations, especially the influential People’s Solidarity for Participatory Democracy.
In addition to the imprisonment of former president Park Geun-hye, the arrests of former conservative president Lee Myung-bak and a string of high-ranking former officials under Park are integral to Moon’s reform programme.
Although these moves please millions of candlelight protesters, they were calculated to continue unnecessary negative partisan feelings.
READ: What got Moon Jae In elected as South Korea's new president? A commentary
Unsurprisingly, the ruling and opposition parties are locked in a partisan feud over the sagging economy, the sharp hike in the minimum wage, a shorter 52-hour working week and North Korea’s non-existent denuclearisation agenda.
The prospects for concrete action on these fronts are not bright.
JOB GROWTH UNDER FIRE
Moon’s people-centred economic policy (known as “J-nomics”) in theory aims for job-led growth by creating a virtuous cycle of higher income, increased consumption, more investment and economic recovery.
But in practice, Moon’s J-nomics has generated widespread public fury — especially among small and medium enterprises, which account for over 90 per cent of South Korea’s corporate entities.
Many are threatening to shut down because they are unable to meet rising labour costs.
Moon’s J-nomics has also overlooked the 6.38 million “non-wage-earning” workers (including those self-employed), who account for 25 per cent of the total workforce.
It represents a fundamental shift in thinking from that of Moon’s predecessors, who argued that jobs were created as a result of growth.
Moon, by contrast, has reiterated his longstanding preference for “income-led growth”, which he equates in importance to “inclusive growth”.
But this promised “income-led growth” has not played out. South Korea’s year-on-year increase in jobs hit an eight-year low in June amid a high jobless rate among its youth.
CORPORATE FRIENDLY POLICIES RAISED EYEBROWS
To break this economic conundrum, Moon has called upon financial deregulation to unlock the growth potential of new businesses, especially internet-only banks.
This signals a shift in Moon’s economic policy focus from “income-led growth” to “inclusive growth”, with Moon pursuing more corporate-friendly policies rather than his former worker-friendly stance.
This shift of focus from wage growth to corporate earnings came about on Aug 8 when Samsung Electronics, the largest chaebols (family-owned conglomerate), unveiled a 180 trillion won (US$160 billion) investment plan, including the creation of 40,000 new jobs over the next three years.
This plan was announced two days after Minister of Strategy and Finance Kim Dong-yeon held a meeting with vice-chairman of Samsung Lee Jae-yong.
Four other leading chaebols (Hyundai Motor, SK, LG and Shinsegae) have also announced similar investment and hiring plans worth a total of about 130 trillion won (US$117 billion) after hosting Kim Dong-yeon.
The meetings between Kim Dong-yeon and these chaebols exposed the obvious disagreement between the Blue House and one of its senior ministers.
But they also more seriously raised the question as to whether it was strategically wise for Kim Dong-yeon to meet with chaebols while the Moon government’s chaebol reform has gone nowhere, especially the government’s requests for “transparency in management and (correction of) unfair practices”.
At the same time, Samsung’s Lee Jae-yong is still on trial for his involvement in the Park Geun-hye scandal, for which he seems so far to have escaped punishment.
Given this extremely contradictory situation, the People’s Solidarity for Participatory Democracy, supported by many other civic groups and the radical Justice Party, has publicly criticised Moon’s deregulation announcement, which they argue violates the fundamental principle underpinning the “well-being of the financial industry”.
READ: Empty shipyard and suicides as 'Hyundai Town' grapples with grim future
PROGRESS WITH NORTH KOREA COULD SAVE MOON
Moon’s saving grace could be his progress with North Korea. His push for North Korea’s denuclearisation and the establishment of a peace treaty in parallel with the restart of regular inter-Korean dialogue on the military has drawn much expectation and hope.
Moon’s vision, outlined in the “New Korean Peninsula Economic Map”, envisages joint industrial zones and traffic networks along the eastern and western coastal areas, including reopening the Kaesong Industrial Park and Mount Kumgang.
Moon’s vision for the Peninsula may well be as far off as it ever was, but his persistence may yet surprise by building concrete steps that North Korea might take towards nuclear disarmament.
Hyung-A Kim is Associate Professor of Korean Politics and History at The Australian National University.A version of this commentary first appeared on East Asia Forum. Read it here.