Excellent Reflections on Minimum Wage Hikes Backfiring Overseas
Mike Mish Shedlock
> Over the weekend, [South Korean] President Moon doubled down on his income-led strategy even as Korea’s higher wages backfire as firms cut back hiring to protect profit margin.
> Why? B/c labor market data is weak after his policy so therefore need to accelerate!
Simple, precise, Accurate
The result should not be unexpected: Approval for South Korea President Moon Hits New Low.
> The approval rating for South Korean President Moon Jae-in has hit a record low amid growing resistance to a recent minimum wage increase.
Curiously a "new low" was 62%. But it was 83% in the first week of May, a week after his summit with North Korean leader Kim Jong Un.
Yesterday, Reuters reported South Korea President Moon says government to strengthen income-led growth stance.
> South Korea's chief presidential policy adviser vowed on Sunday to not only stick with but strengthen the government's income-led growth strategy, dismissing increasing calls to ditch the policy following a series of poor economic data.
> Poor employment and household income data released in recent weeks raised concerns that President Moon Jae-in government's push for a sharp minimum wage hike and shorter work hours did more harm than good to Asia's fourth-largest economy.
> "The Moon administration is seeking a paradigm shift in managing the economy, for the first time in decades," Jang said. "The government recognizes the gravity of the recent employment and income index and will do its best to tackle the current situation by employing all policy tools."
Loud and Clear Message
If it doesn't work, double down. That's the universal message from central bankers and politicians.
Mike "Mish" Shedlock