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[News] KDI and the OECD Hold Joint Conference for the Publication of Inclusive Growth Review of Korea

February 08, 2021

Date: Feb. 8, 2021 (Mon.) 17:00-18:30
Host: KDI, OECD

The Covid-19 crisis has exacerbated polarization across the globe. 
Based on its commitment to achieving sustainable growth that is rooted in social stability, the Moon administration continues to work towards building an innovative, inclusive nation. Additionally, efforts are being made to pursue the Korean New Deal, which encompasses both the Digital and Green New Deals, to tackle the post-pandemic landscape. 
An innovative and inclusive nation and the Korean New Deal are aligned with sustainable economic growth and fairer distribution which are advocated for by the OECD and many other international organizations. 

Accordingly, a joint conference was held by the OECD and KDI on February 8th to mark the publication of the Inclusive Growth Review of Korea: Creating Opportunities for All report, and present the findings of this two-year research project.
The Inclusive Growth Review of Korea: Creating Opportunities for All is the first national case report that applies the OECD’s Framework for Policy Action on Inclusive Growth. It evaluates the status of Korea's inclusive growth according to international standards, and comprehensively analyzes the achievements and future policy tasks.
The OECD and KDI will continue to collaborate to ensure that inclusive growth policies reach every corner of the world, and to promote the advancement of economic, social, population, and regional policies, among others.
This project is just the beginning of the cooperation between the two organizations to actively explore timely issues that include post-Covid policy response measures.  

The conference was an online event due to Covid-19, and live streaming was provided exclusively via Zoom.

Each chapter of the report was introduced by OECD experts, and the presentations were followed by open discussions with domestic experts.

The first chapter determines that the paradigm shift in government policy toward an innovative and inclusive state has not only contributed to achieving sustainable growth, but also to significantly improving quality of life.
In recent years, the Korean government has redirected its focus from ‘growth-first’ policies to a policy paradigm that emphasizes economic participation from all social standings through balanced growth and distribution.
Owed to such efforts, improvements have been seen in household income and employment rates for youths and women. The share of low-wage workers and annual working hours have also decreased. 
It is expected that stronger public education policies, such as  free high school education and abolishment of university entrance fees, have helped to provide low-income households with more opportunities to participate in society. Moreover, there are indications that the expansion of social safety nets, which covers strengthening employment subsidy guarantees and raising basic allowances and disability benefits, has contributed to improving the security and well-being of vulnerable groups. 

In particular, of the policies that have promptly responded to recent socioeconomic changes, the OECD highly assesses Korea’s New Deal and Covid-19 response. The Korean New Deal (2020) revolves around digital transformation and a transition to a green economy, and also aims to provide support to neglected groups by strengthening social safety nets.
To become a digital and low-carbon economy, and a leader in the green industry, plans have been made to invest a total of 160.0 trillion won to create more than 1.9 million jobs by 2025. This has been deemed to be an effective policy move in realizing a sustainable and inclusive society.
Dubbed ‘K-quarantine,’ Korea’s response to the Covid-19 crisis has been the most successful among OECD members, especially in terms of early containment and preserving jobs through active financial support for SMEs and households via supplementary budgets.
However, more support for childcare and education will be needed as well as stronger employment and social safety nets to alleviate inequality and encourage the participation of vulnerable groups in economic and social activities. Supplementary measures are also required to link policies for inclusiveness with those for innovation. 

The second chapter analyzes the challenges that Korea’s labor market faces due to demographic and technological changes, and draws on policy implications for inclusive employment and education.
Efforts that include converting non-regular workers in the public sector to regular workers, raising the minimum wage and unemployment benefits, and broadening the scope of employment insurance have contributed to narrowing the wage gap and strengthening employment welfare. 
However, the dualism in the labor market remains an unresolved task and will require the employment gap to be tackled through improvements in employment conditions for non-regular workers and the minimum wage. 
While it is expected that the job loss due to automation is below the OECD average, Korea should establish social safety nets that can respond to the rapidly changing labor market, and provide support for income and reemployment. 
In addition, tailored policy support is needed for vulnerable groups such as women, youths, migrant workers, and the elderly, and the provision of vocational training and quality jobs must be highlighted. 

The third chapter introduces Korea’s policies and achievements in regard to innovation, and calls to attention the productivity gap between companies and industries, and the low survival rate of start-ups and SMEs. 
Owing to an effective export-driven growth strategy, Korea has successfully integrated itself into global value chains (GVCs), and is now the world's sixth largest exporter. However, if the future development of the manufacturing industry is led by the chaebol, this will not only hamper Korea’s innovation, but also widen the gap between the service industry and manufacturing industry and that between large firms and SMEs. 
The government’s policy efforts to prepare for the Fourth Industrial Revolution, such as regulatory sandboxes, Regulation-free Special Zones, and support for R&D at SMEs, have received high praise. 
However, support measures should be further streamlined to increase the growth and survival rate of start-ups.
Also, to establish a more inclusive GVC strategy, additional measures will be needed that can improve productivity, provide tax support, and reform the commodities market to invigorate participation from SMEs and service sectors. 
 
 
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Office of Global Economy
Providing Economic Forecast and Macroeconomic Policy Direction, the Groundwork for a Brighter Future

The Department of Macroeconomics is conducting researches on the macro economy and macroeconomic policy, particularly focusing on suggesting the analysis of macroeconomic trends and current status of the economy at home and abroad, the economic forecast, and the policy direction of the macro economy. The Department is also in charge of establishing, sustaining and maintaining various econometric models, based on which it analyses policy effects and develops a long-term economic forecast.

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