President Lee “We should take the situation in Europe as a cautionary example… We must focus measures on revitalizing local economies·neighborhood commercial districts” - 경향신문

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President Lee Jae Myung speaks during the 46th Cabinet meeting held at Cheong Wa Dae on the 27th. Cheong Wa Dae Photo Press Corps

On the 27th, President Lee Jae Myung, referring to large-scale protests in France and other parts of Europe, said, “The biggest and most fundamental cause of the difficulties Europe is facing is, in the end, low growth,” and added, “We should also take the situation in Europe as a cautionary example.” He particularly stressed, “It is time to make an all-out effort to improve domestic demand,” and instructed a review of ways to back job creation through fiscal measures, such as expanding local tax arrears management teams and subsidizing labor costs for domestic agricultural workers. The point was that, to overcome low growth by fostering domestic demand, national finances need to play the role of a primer for job creation.

At the Cabinet meeting he chaired at Cheong Wa Dae that day, he said, “As large-scale protests break out in several European countries, social disorder and conflict are emerging.” He said, “The squeeze on livelihoods from high prices, a stagnant economy, and accumulated inequality are the common background to the difficulties Europe is now experiencing,” adding, “With low growth prolonged, youth unemployment and polarization are deepening and the fiscal base is becoming fragile, shaking the stability of society as a whole to its roots.”

He said, “Even in the Republic of Korea, if one looks only at economic indicators, the results are very impressive, but recovery in livelihoods is still slow, and disparities in income, assets, and jobs persist,” adding, “In the end, sustainable growth is important.” He continued, “With increasing fiscal space, we should expand investment in advanced industries, nurture domestic demand, and actively mobilize policy tools that the public can feel in their daily lives so that they can sense recovery in livelihoods.”

In particular, he said, “It is time to make an all-out effort to improve domestic demand so that the wave of growth can become a great surge that changes the lives of all citizens,” and urged, “During the remaining period of this year, focus on implementing measures to revitalize local economies and neighborhood commercial districts.”

When the Financial Services Commission reported a plan to strengthen punishment of illegal lenders charging ultra-high interest rates while guaranteeing microloans of 1 million won to low-credit borrowers, he said that support for inclusive finance, one of the three core social policies (housing·jobs·inclusive finance, etc.), is too weak, and ordered the preparation of more aggressive measures. He said, “If people cannot borrow from financial institutions and loan sharks, because they are punished, refuse to lend, what should people in urgent need do?” and added, “If we institutionally block illegal private lending, the government must take responsibility.”

He also mentioned increasing hiring for local tax revenue arrears management teams to create public jobs. After receiving a report from Minister Yoon Ho-jung of the Ministry of the Interior and Safety on plans to operate the local tax revenue arrears management teams, he said, “Even if we pay a monthly salary of 3 million won and recover only 2 million won, we should still employ the teams,” explaining, “Tax collection is a public order function.” He said, “I think local governments need at least 10,000 people for these teams,” adding, “Would that not create 10,000 jobs?”

He also raised the idea of the government supporting labor costs for domestic agricultural workers. He said, “From the perspective of securing jobs, could we not make local government policies that subsidize labor costs for those who work as agricultural laborers into national policy?” and added, “If someone works for about six months a year and we pay 5 million won per month, it might be feasible.” He said, “As the daily wage for agricultural workers is 120,000 won, let us add a fixed amount on top,” and instructed Minister Song Mi-ryeong of the Ministry of Agriculture, Food and Rural Affairs to “study how much should be paid for domestic workers to be willing to take on agricultural work.”

To Baek Seung-bo, head of the Public Procurement Service, he said, “Swarm bidding and corruption have decreased significantly, but additional steps are still needed,” and instructed, “Conduct a full survey to confiscate bid bonds in cases where those without delivery capacity only seek middleman margins.” He said, “We need methods to stop abnormal delivery practices in which someone else bids·supplies while one seeks a middleman margin,” and added, “To do so, raise the bid bond, which is confiscated in the event of a fraudulent award, from 5% to around 10% for small amounts, and, if necessary, hire many short-term personnel and have the Ministry of the Interior and Safety support post-fact investigations.”

There was also a request to inject fiscal resources to revitalize the construction sector. He said, “We must accelerate public projects with poor execution and raise housing starts as much as possible,” adding, “Because housing supply itself has meaning and also helps revive the sluggish construction sector, please consider not only national credit support but also fiscal support if needed.”