Re: [NJFAC] S. Korea's minimum wage helped it avoid global shocks

wow. This is great stuff. Thanks, June.  See you on Friday.

F

https://www.dsausa.org/democratic-left/june-jobs-pretty-good-but-wait-for-the-recession-train/

Frank Stricker

-----Original Message-----
From: June Zaccone <junez@njfac.org>
To: goodjobs list <goodjobsforall@googlegroups.com>
Sent: Sat, Jul 30, 2022 2:06 pm
Subject: [NJFAC] S. Korea's minimum wage helped it avoid global shocks

Minimum Wage and How South Korea Avoided Japanization

South Korea's high minimum wage made its export-dependent economy more resilient.

....

The liberal Moon Jae-in 문재인 administration steeply increased the minimum wage, raising it by 41.6% over its five years from 2018 to 2022. The raise provoked outcry from businesses, pushing the conservative Yoon Suk-yeol 윤석열 administration to hold back the minimum wage increase despite high inflation. (See previous coverage, "The Triple Quandary.")

Yet the wage increase, including minimum wage hike, is precisely how South Korea has historically managed to avoid Japan-like stagnation. While the Japanese economy slogged through the "Lost Decades" since the early 1990s, the South Korean economy continued its steady growth over the past thirty years, surpassing Japan's PPP-adjusted per capita GDP in 2018, although the two economies have similar structures of being export-oriented and having a bifurcation of highly efficient hyper-modern manufacturing companies existing side-by-side with an inefficient and unproductive service industry.

According to Richard Katz, senior fellow of the Carnegie Council for Ethics of International Affairs, South Korea avoided Japanization by having wages rise along with economic growth, preserving the strength of domestic demand. South Korea's minimum wage is 62% of its median wage; Japan's, only 45%.

"Because domestic private demand is strong, Korea is far less vulnerable to global shocks, even though Korea's trade:GDP ratio is twice Japan's", wrote Katz in Toyo Keizai, a business and finance-focused Japanese publication. "Countries less vulnerable to macroeconomic shocks enjoy faster average growth over the long term."

--

June Zaccone
National Jobs for All Network
http://www.njfac.org

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[NJFAC] S. Korea's minimum wage helped it avoid global shocks

Minimum Wage and How South Korea Avoided Japanization

South Korea's high minimum wage made its export-dependent economy more resilient.

....

The liberal Moon Jae-in 문재인 administration steeply increased the minimum wage, raising it by 41.6% over its five years from 2018 to 2022. The raise provoked outcry from businesses, pushing the conservative Yoon Suk-yeol 윤석열 administration to hold back the minimum wage increase despite high inflation. (See previous coverage, "The Triple Quandary.")

Yet the wage increase, including minimum wage hike, is precisely how South Korea has historically managed to avoid Japan-like stagnation. While the Japanese economy slogged through the "Lost Decades" since the early 1990s, the South Korean economy continued its steady growth over the past thirty years, surpassing Japan's PPP-adjusted per capita GDP in 2018, although the two economies have similar structures of being export-oriented and having a bifurcation of highly efficient hyper-modern manufacturing companies existing side-by-side with an inefficient and unproductive service industry.

According to Richard Katz, senior fellow of the Carnegie Council for Ethics of International Affairs, South Korea avoided Japanization by having wages rise along with economic growth, preserving the strength of domestic demand. South Korea's minimum wage is 62% of its median wage; Japan's, only 45%.

"Because domestic private demand is strong, Korea is far less vulnerable to global shocks, even though Korea's trade:GDP ratio is twice Japan's", wrote Katz in Toyo Keizai, a business and finance-focused Japanese publication. "Countries less vulnerable to macroeconomic shocks enjoy faster average growth over the long term."

--

June Zaccone
National Jobs for All Network
http://www.njfac.org

--
This list is only for announcements, so you may not post. To contact the list manager, write to junez [at] njfac.org
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[NJFAC] Wage Stagnation and Productivity

Wage Stagnation and Productivity: Challenging the Conventional Analysis  By Claudia Fontanari and Antonella Palumbo Jul 7, 2022 Stagnating real wages may have contributed to the slowdown of US productivity

In much of the advanced world, we have witnessed at least three decades of stagnating real wages and massive reductions in the labor share in income.....

The prevailing idea in the literature, it results, is that a combination of market mechanisms and exogenous shocks have made labor (and especially poorly qualified labor) superabundant with respect to other factors and the economy's requirements.[1] Implicit or explicit, the message of the analyses that see the change in distribution as essentially the outcome of market forces is that there is little that policies can do, apart from somehow palliating the worst social consequences of the technological or commercial shocks.

Generally, however, these analyses fail to give an account entirely consistent with the data.

....

The problem of wages and work conditions is now crucial. Higher wages and safer and better jobs would not only re-orient firms towards higher productivity and more efficient organization. They would possibly also represent a serious incentive towards enhanced labor supply, thus easing one of the constraints currently concurring to inflation. The lasting wounds that the regime of low wages inflicts on the economy, in addition to what it entails for the greatest part of society, should be a matter of serious concern.

--

June Zaccone
National Jobs for All Network
http://www.njfac.org

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