Opposition party attacks ‘Choinomics’

South Korea’s main opposition party on Tuesday intensified its criticism of the government’s economic proposals for next year, calling them infeasible as they would snowball already-worrisome national debt levels.

The denouncements came one day after Finance Minister Choi Kyung-hwan forecast growth of 3.8 percent in 2015, and unveiled plans to ramp up the real estate market, among other policies for next year. The plans have been coined “Choinomics.”

The main opposition New Politics Alliance for Democracy said Choi’s policies should instead be called “debt-a-nomics,” because they would worsen national debt levels. The party also said Choi’s “inflated” growth projection would force officials to levy more taxes later in the year.

“It would be great if the economy grows by that much,” NPAD Rep. Baek Jae-hyun said. “But the hopeful projections are likely to cause lower-than-expected tax revenues,” the lawmaker added, forcing the government to either extract more taxes late in 2015 or let the public debt grow.

South Korea’s government debt stood at 489.8 trillion won ($443.6 billion) as of 2013 according to the Ministry of Strategy and Finance. But when debts held by nonfinancial state-run firms are added, the public debt figure inflate to over 898 trillion won, more than 62 percent of South Korea’s annual GDP.

The figure does not count the compulsive deficits that military and teachers’ pensions wreak on the government, which has been forced to pour up to 598 trillion won into the pensions, to continue payouts.

Private debt has also reached concerning levels, soaring above 1.06 quadrillion won according to the Finance Ministry.

“The government’s proposed policies are a mess,” NPAD Rep. Kim Kyung-hyub said. “(Choi’s policies) are like giving arteriosclerosis patients nutrient supplements, or like starving malnourished patients.”

“Choinomics is dead,” he added. “Debt continues to grow.”

The government’s 2015 policy outlook suggested its own solutions to the debt problem. Officials proposed incrementally converting current housing loans into amortization deals for borrowers meeting particular criteria. Up to 40 trillion won in such loans could be affected.

Officials also suggested lowering the minimum payback amount for former students who had taken out government loans to attend college, as part of measures to control rising private debt levels.

Regulations protecting “incompetent” permanent workers would also be slashed, officials added, as part of efforts to restructure the economy.

Another proposal is to increase unemployment benefits for laid-off temporary workers. Many South Korean firms pay temporary workers low wages, and often fire them if the economy slackens off. Opposition lawmakers have traditionally called for improving the benefits for such employees.

The NPAD on Tuesday criticized the proposal though, saying South Korea’s labor market was already too flexible.

“The average worker works for about 42 months with one employer,” NPAD Rep. Seo Young-kyo said. “The policies are likely to simply increase the number of temporary workers.”

By Jeong Hunny ()