10월8일 자료는
1. A Welcome Initiative
2. Tax cuts for the rich
입니다.
A Welcome Initiative
Labor, Management Should Reach a Grand Compromise
In a rare bipartisan consensus, political circles are looking toward the goal of industrial peace as a precondition for economic recovery. The ruling Uri Party has favorably responded to the call of the main opposition Grand National Party for promoting a compromise between labor, management and the government. It is not certain how exactly the rival political camps will develop their proposals, but it is still quite encouraging to see them talk about business instead of politics at long last. Nothing is more urgent for Korea now than reviving the ailing economy. Of course, it is important for the nation to address historical wrongs and firmly establish a national identity. The problem, however, is that governing circles only seem prepared to engage in ideological battles. So the new leadership of the ruling party was on the right track when it declared it would endeavor to breathe life into the economy. We hope to hear similar resolve from President Roh Moo-hyun.
The opposition GNP cited the example of the Netherlands, which overcame an economic crisis in the 1980s by reaching a grand compromise among the three major parties involved: unions dropped calls for increased wages; management guaranteed job security; and the government reduced taxes to make up for losses. But the Korean groups still have a long way to go before the adoption of the ``Dutch-model“ for a grand compromise can be considered, if the reactions of both the ruling party and labor unions are any guide.
As labor leaders have long noted, the circumstances in the two countries are quite different. Unlike in the Netherlands, the social safety net and workers‘ political voice in Korea are still too weak to allow the direct application of the Dutch system to this country. In contrast to their Dutch counterparts, Korean employers are also extremely reluctant to allow employees’ participation in management. There are also a number of other stumbling blocks, including the issue of irregular workers, in the way before any form of compromise can be reached.
This means much depends on the government and its ability to secure concessions from both labor and management. This is a Herculean task, as the government is under attack from both sides due to its inconsistent policies. It needs to strictly enforce the law rather than engage in hasty troubleshooting by waiting for labor and management to settle disputes by themselves, and sternly deal with lawbreakers if need be.
In this regard, politicians and bureaucrats might well start by addressing unfair and distorted business transactions between big businesses and small suppliers, including the former‘s excessive reduction of supply prices and hiring of part-time workers. This leads to wide wage gaps between workers, with a large number of non-regular laborers and serious social inequality. The long-awaited move toward a harmonious labor-management relationship can only be achieved by resolving these fundamental problems.
08-25-2004 18:55
Tax Cuts for the Rich
Latest Measure Reflects Government's Dilemma
Long agony does not always lead to a good conclusion. A case in point is the government‘s latest measure to scrap special excise taxes on 24 commodities to bolster sagging consumption. In the worst-case scenario, it will only end up denting state coffers without stimulating the dormant economy. By reducing consumption taxes mostly for luxury items, the rich may get richer while the poor will have to suffer from a sense of relative deprivation.
First of all, the government‘s idea of encouraging consumption by axing taxes is misdirected. People choose not to spend because of declining incomes and uncertainty about the future. So they will not loosen their purse strings if the price of an up-to-date PDP television comes down from 5.2 million to 5 million won. The standard deduction from income in the range of 600,000 won to 1 million won would result in a tax cut of 50,000 won for a worker with an annual salary of 30 million won.
Similarly, the uniform 1-percent cut in income tax has nothing to do with the 47 percent of wage earners and 51 percent of self-employed that do not pay any income tax at all. The 24 commodity items, which also include golf clubs, yachts, jewelry and carpets, are mostly beyond the reach of these working-class people. The tax cuts will only benefit the wealthy, who would rather go abroad for shopping anyway. For similar reasons, the corporate tax cut for large businesses will not lead to brisk investment.
No less problematic are the wavering principles behind the government‘s tax policy. Hardest hit was the function for the fair redistribution of wealth. The government’s measure, although it is aimed at boosting the economy through encouraging rich people‘s spending, will result in a widening of the gap between high- and low-income brackets. It is the ABC of tax principles to reduce the number of things subject to tax exemptions and reductions but the latest package has increased them.
All told, the government and the ruling party, in part pressed by the opposition party‘s preemptive “save-the-economy“ campaign, have hurriedly come up with their own countermeasures. But this is the result of the equivocal stance of ruling circles. They have to decide first whether they will go all out to bolster the economy or push ahead with political projects such as relocating the administrative capital. With the already emptying state coffers and the present circumstances, the two can hardly go together.