South Korea elects Moon on promises of jobs, chaebol reform
Moon's government will concentrate on an expansionary fiscal policy
KIM JAEWON, Nikkei staff writer
SEOUL -- South Korea has elected the Democratic Party's Moon Jae-in as president, ushering in an era that will be led by a liberal government focused on implementing a Keynesian-style fiscal expansion policy to boost a lackluster economy.
Moon declared victory Tuesday night. In a speech to supporters in Seoul's Gwanghwamun Square, he promised to be "a president who will unite the entire public."
He spoke of his hopes to "build a new country where justice and principles prevail."
Moon stressed that he will also serve those who did not support him and said he seeks to avoid a divide between progressives and conservatives. "I will work hand in hand with the other candidates to move forward into the future," he said.
The clear front-runner to clinch the presidency ahead of the vote, Moon has promised to create 810,000 jobs in the public sector over the next five years by spending 4.2 trillion won ($3.7 billion) annually.
The human-rights-lawyer-turned-politician vowed to hire 170,000 civil servants and add 340,000 jobs in social services. The other 300,000 jobs will be created by reforming the informal sector, he said.
"I will put job creation as the top priority by mobilizing all national resources," Moon said in a television debate last month. "I will make a 100-day job creation plan as soon as I take office."
Asia's fourth-largest economy is grappling with high youth unemployment. According to the country's labor ministry, the unemployment rate for those between 15 and 29 reached 11.3% in March. Although the figure is down slightly from 11.8% a year ago, it is still unacceptably high. By comparison, the unemployment rate in the U.S. for those aged 16 to 24 was 8.9% in March.
Monitoring and reforming family-controlled conglomerates, or chaebol, is another area that the 64-year-old will focus on. Moon said he is the most suitable contender to reform the chaebol, as he has not accepted favors from any company.
He promised to limit the influence of owner families in conglomerates and strengthen punishments for economic crimes, such as embezzlement and breach of trust. At the same time, the new government will expand minority shareholder rights by introducing electronic votes at shareholders meetings.
Analysts say that Moon is on the right track to reforming the chaebol, efforts that will increase the country's long-term competitiveness.
"Encouraging stronger corporate governance, greater competition and a better allocation of resources to promote efficiency and innovation should provide a catalyst for boosting productivity growth over the long term," said Oliver Salmon, an economist at Oxford Economics.
"Despite past failures, there is a sense that when it comes to chaebol reform, this time could be different, with the scale of public outrage providing a significant mandate for the new leadership to implement real change," Salmon said.
This early election was called after former President Park Geun-hye was impeached on charges of corruption that involved a close confidante of hers and some of the biggest companies in the country, including the Samsung Group.
Moon also vowed to help the country's troubled shipbuilders by offering them contracts and financial support. He also wants to help increase their competitiveness in technology.
South Korean shipbuilders have been rocked by weak demand. In particular, Daewoo Shipbuilding and Marine Engineering is undergoing a tough restructuring process, cutting jobs and selling key assets.
On a smaller scale, Moon promised to scrap basic fees charged by mobile phone companies, as he sought to win more votes. The nation's telecommunications companies charge customers about $10 in so-called basic fees.
But not all of Moon's policies have been welcomed. He promised to reopen the Kaesong Industrial Complex, drawing strong opposition both at home and abroad. The complex is based just inside North Korea across the demilitarized zone from South Korea. It was established in 2004 with the chief purpose of increasing cooperation between the two countries. But critics worry that money flowing into North Korea may be redirected to the development of nuclear arms.
The complex housed South Korean corporations that hired North Korean workers, but has been closed since February 2016 when the South withdrew its companies to protest a nuclear test and launch of long-range missiles by the North.
Nikkei staff writer Kenichi Yamada in Seoul contributed to this report.