[Weekly Review] Moon's 'Life-or-Death' Mission to Secure Economic Growth Engines... 'GVC·Green New Deal' Directive

"Establishing the Foundation for a Nationwide Employment Insurance Era"... Expressing Commitment to Securing a Safety Net

President Moon Jae-in delivering a special national address on the third anniversary of his inauguration at the Chuncheon Hall of the Blue House on the morning of the 10th. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok] President Moon Jae-in declared that he will devote the latter half of his administration’s efforts to securing growth momentum for the Korean economy after the novel coronavirus disease (COVID-19). He announced plans to restructure the Global Value Chain (GVC) to increase the return of domestic companies (U-turn) and foreign direct investment (FDI). He instructed government ministries to prepare concrete measures related to the 'Green New Deal.' He also pledged to establish a robust safety net through universal employment insurance. Meanwhile, last month’s employment performance was the worst since the foreign exchange crisis. Support for key industries struggling due to COVID-19 started with 'priority support for 2 sectors' instead of the initially announced 7 sectors.

◆ "Making Korea the 'World Factory of Advanced Industries'" = In his third anniversary speech, President Moon stated that Korea will become the 'world factory of advanced industries' through GVC restructuring. Securing national growth momentum was included as a key agenda for the latter half of his administration.

President Moon emphasized, "Korea has become the safest and most transparent production base in the world," adding, "The world now prefers innovation capabilities and safe investment destinations over cheap labor costs, which presents a golden opportunity for us."

Earlier on the 6th, Sung Yun-mo, Minister of Trade, Industry and Energy, presented the '5 major changes and 8 key tasks' aligned with President Moon’s policy message, stating, "We will build a production base without shutdowns."

At the first meeting of the 'Post-COVID Industrial Strategy Dialogue and Industry-Crisis Response Team,' Minister Sung proposed eight key tasks: ▲GVC restructuring ▲building a production base without shutdowns (temporary work stoppages) ▲spreading 'K-quarantine' and 'K-bio' as global standards ▲fostering non-face-to-face industries ▲innovation in the energy industry and response to low oil prices ▲enhancing corporate vitality and supporting new industry investments ▲solidarity among economic agents ▲exercising global trade leadership.

Among these, policies to promote the global expansion of 'K-quarantine' and 'K-bio,' GVC restructuring, fostering non-face-to-face industries, and post-COVID global trade cooperation leadership are planned to be prepared within the first half of the year.

◆ "Preparing Concrete Measures for the Green New Deal" = On the 12th, President Moon instructed the ministers of the Ministry of Environment, Ministry of Trade, Industry and Energy, Ministry of SMEs and Startups, and Ministry of Land, Infrastructure and Transport to report on job creation plans through the Green New Deal.

After receiving written reports from the four ministries, President Moon plans to review whether to include the Green New Deal as part of the 'Korean New Deal.' The government has currently set three tasks for the post-COVID era: ▲building digital infrastructure ▲fostering non-face-to-face industries ▲digitalization of social overhead capital (SOC).

He expressed the intention to raise Korea’s international standing by leading greenhouse gas reduction efforts while also creating jobs. Earlier, on the 17th of last month, shortly after the ruling party’s landslide victory in the general election, Greenpeace sent a letter urging President Moon to introduce the Green New Deal.

In this regard, on the 11th, Cho Myung-rae, Minister of Environment, responded to Jennifer Morgan, Secretary-General of Greenpeace International, stating, "Regarding the legislative promotion of the Green New Deal pledge and the preparation of economic recovery strategies, the Ministry of Environment is deeply reviewing related policies with the understanding that climate protection must be considered." He added, "We will strive to ensure that climate and environmental issues are addressed importantly during the economic recovery process in the post-COVID era."

◆ "COVID-19 Crisis Requires a Strong Employment Safety Net" = In his 'Special Speech on the 3rd Anniversary of the Presidency' on the 10th, President Moon said, "We will lay the foundation for an 'era of universal employment insurance' where all workers receive employment insurance benefits." He diagnosed, "The COVID-19 crisis still demands that we build a stronger employment safety net, which remains vulnerable."

However, President Moon said, "We will 'gradually' expand the scope of employment insurance by improving laws and systems." He added, "We will also gradually expand employment insurance coverage for self-employed workers through social consensus," and "We will promptly implement the Korean-style unemployment assistance system, the National Employment Support System, which supports tailored employment such as vocational training for low-income groups, youth, and small-scale self-employed, as well as income support like job-seeking promotion allowances."

Although he clearly stated that this is not a 'full-scale expansion in a short period' as some had worried, it is evident that the administration’s philosophy is to eliminate blind spots in employment insurance.

◆ April Employment Performance 'Worst Since the Foreign Exchange Crisis' = The immediate employment results are unsatisfactory. According to the 'April Employment Trends' released by Statistics Korea on the 13th, the total number of employed persons last month decreased by 476,000 compared to the same period last year. This is the largest decline since February 1999, right after the IMF foreign exchange crisis.

The performance of temporarily furloughed workers, closely related to President Moon’s directive to establish a 'universal employment safety net,' was also poor. Although classified as employed, the number of temporarily furloughed workers who were unable to work actually reached 1,485,000 last month, an increase of 1,130,000 compared to the same period last year. This marks over 1 million increase for two consecutive months.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, wrote on Facebook that day, "The increase in temporarily furloughed workers is evidence that our employment safety net, such as employment retention subsidies, is functioning, but if difficulties continue, it will be the Achilles’ heel of our labor market, leading to a surge in unemployment."

◆ Support for Key Industries, '2 Sectors First'... "Will Supplement" = The government changed the sectors supported by the 40 trillion won Key Industry Stabilization Fund from the initially announced 7 sectors to 2 sectors, namely aviation and shipping, and decided that other sectors will be determined through inter-ministerial consultations. Companies receiving fund support must maintain 90% of their total employment.

On the 12th, the government approved the amendment to the Enforcement Decree of the Korea Development Bank Act for the establishment of the Key Industry Stabilization Fund at a Cabinet meeting presided over by President Moon at the Blue House.

The draft enforcement decree listed seven sectors: ▲aviation ▲shipping ▲machinery ▲automobiles ▲shipbuilding ▲electric power ▲telecommunications. However, the approved enforcement decree included only two sectors: aviation and shipping.

Lee Se-hoon, Director of Financial Policy Bureau at the Financial Services Commission, explained, "For legal reasons, only two sectors were listed, but the original policy to support seven key industries remains unchanged," adding, "If there is additional funding demand beyond the seven key industries, it will be supplemented through inter-ministerial consultations."

This content was produced with the assistance of AI translation services.