South Korea’s president Moon Jae-in has called on companies prospering during the coronavirus pandemic to share their profits with struggling people and businesses, as fears rise over worsening economic inequality.
The call from the leader of Asia’s fourth-biggest economy highlights the pressure on many world leaders amid surging stock and property prices coupled with rising unemployment and slow wage growth.
“Whether it is called profit sharing, or whatever . . . I think it is the right way to go,” Mr Moon said at a rare press conference on Monday.
The president noted that his administration had deployed four additional budgets since the start of the pandemic.
The record stimulus spending has included cash handouts, disaster relief funds, support for jobs and business bailouts. But such government policies are “not going to be enough” to deal with the worsening disparities, he said.
Mr Moon is entering the final year of his five-year term, during which he has made addressing inequality a priority.
The president suggested that companies that have benefited during the pandemic could set up funds to help those that were badly affected. The government would provide new incentives for businesses that establish such funds, but he stopped short of making payments compulsory.
The comments came as South Korea grapples with its worst job losses since the Asian financial crisis while the pace of house price increases are among fastest in the world, leaving many young people and temporary workers with bleak prospects.
That is despite forecasts for booming tech exports to deliver robust 3 per cent growth in GDP next year and as the government, which avoided a nationwide lockdown in 2020, is weeks away from rolling out a coronavirus vaccine.
Further highlighting the disparity facing policymakers, seven South Korean companies were among the top 100 globally that prospered during the pandemic, based on an FT rating.
Park Chong-hoon, head of research at Standard Chartered in Seoul, said the income gap had worsened during the pandemic, “making rich people richer”, as asset prices rose on stimulus spending and increased liquidity.
“But poor people have become poorer . . . [and] small merchants in the service sector and temporary workers in the retail sector bore the brunt,” Mr Park said.
Mr Moon, whose popularity has been hammered after the country’s worst Covid-19 wave hit last month, struck a resilient tone.
He noted that the daily transmission rate continued to decline, vaccine distribution was poised to start in February and South Korea was set to achieve herd immunity as early as September, ahead of many other countries.
“I do believe that we are at the end of the tunnel, we do see the light there,” he said.
Additional reporting by Kang Buseong