Economic Worries Bring South Korea’s Moon Down to Earth

Economic Worries Bring South Korea’s Moon Down to Earth

President’s approval rating has fallen for seven consecutive weeks as job growth slows

By Andrew Jeong

Aug. 3, 2018 7:39 a.m. ET

SEOUL—Fifteen days after taking office, South Korea’s leader stood in front of news cameras and pointed to a large screen newly installed by his desk, displaying the latest employment data. Smiling, he told reporters that energizing a slowing economy was his priority.

Concern over the state of the economy is now eroding support for President Moon Jae-in, who has spent much of his 15 months in power focused on a politically popular engagement with North Korea.

While Mr. Moon remains broadly favored, his approval rating has fallen for seven consecutive weeks and Friday hit a record low of 60%, a Gallup Korea poll showed—a decline of 23 points since May.

South Korean President Moon Jae-in at the start of a March conference on youth unemployment—one of the concerns eroding his approval rating. PHOTO: YONHAP/EPA/SHUTTERSTOCK

Economic worries weigh on South KoreanPresident Moon Jae-in's approval rating.

Source: Gallup Korea telephone poll of about 1,000adults; margin of error: +/-3.1 percentage points

The fall reflects worries about job creation and the steep increase in the minimum wage approved by the government last month, say political analysts. Businesses, particularly mom-and-pop shops that employ a large portion of minimum-wage earners, say the 10.9% bump—set to take effect next year, and coming on top of this year’s 16.4% increase—greatly outpaces overall economic growth and exceeds the means of small employers.

Meanwhile, job growth has slowed. South Korea added about 836,000 jobs in the first six months of 2018, less than half the 2.15 million of a year earlier. The government projects the economy will grow just 2.9% this year, down from 3.1% in 2017.

Respondents to the Gallup poll cited as their top concerns Mr. Moon’s management of the economy, his support for the minimum-wage rises and a perceived failure to tame the youth unemployment rate, which rose early in the year before falling to 9% in June. The poll, taken this week, had a margin of error of 3.1 percentage points.

Mr. Moon’s office declined to comment.

“The hikes in the minimum wage have not been matched by adequate productivity improvements, leading to fewer jobs. These employers simply can’t pay the new minimum wage,” said Kim Won-shik, an economist at Konkuk University in Seoul.

The increase will hamper overall wage growth by leading employers to delay pay increases for more experienced workers, said Ryu Pil-son, spokesman for the Korea Federation of Micro Enterprises, which represents small store owners.

The minimum wage is increased annually, and Mr. Moon hasn’t ruled out lifting it to about $9 for 2020 to fulfill a campaign pledge. Administration officials, though have said they may temper future increases depending on the economy—an apparent attempt to address criticism.

While the economy has been a drag on his popularity, the president has received widespread support for his outreach to North Korean leader Kim Jong Un, which has reduced inter-Korean tensions and led to a meeting between Mr. Kim and President Trump in June. Mr. Moon has spoken of joint economic projects with Pyongyang, presenting them as an opportunity for Seoul.

In the week after his April summit with Mr. Kim, Mr. Moon’s approval rating soared 10 points to 83%, one point below its peak.

Mr. Moon also benefits from a lack of a credible opposition. While the main conservative party holds 112 of 299 seats in the legislature—nearly as many the 129 held by Mr. Moon’s party—its approval ratings have languished between 9% and 14% this year.

All of South Korea’s democratically elected presidents have left office with approval ratings below 30%.

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