▲ Major ripple effects resulting from an increase in the number of civil servants by 130,000 over the five years of the Moon administration. ⓒFight Touch One
An analysis was made that the number of public servants increased by 130,000 over the past five years under the previous Moon Jae-in administration, and that the aftermath led to a decline in various economic indicators. The excessive expansion of employment in the public sector has caused enormous damage to the entire economy, including a 23.1 trillion won decrease in real gross domestic product (GDP) and a decrease in private jobs by 188,000.
According to a report titled ‘The effect of declining economic vitality due to the increase in the number of civil servants’ published by private research institute Pie Touch One on the 12th, the number of civil servants increased during the five years of the Moon Jae-in administration (June 2017 to May 2022) reaching 130,266. In terms of growth rate, it is 12.6%. This is the highest level among governments launched since the 2000s. It is more than 10 times higher than the 1.2% (12,116) increase in the number of civil servants over the past five years under the Lee Myung-bak administration.
The rapidly enlarged civil service organization caused various side effects. First, as the number of public officials rapidly increased, the amount of regulation also increased significantly. If you look at the number of regulations that have increased over the past five years, it amounts to 14.7%. As a result, regulatory barriers have increased, and as the number of small and medium-sized enterprises unable to overcome regulatory barriers has increased, the total production of intermediate goods has decreased and the price of intermediate goods has risen. As the price of intermediate goods increased, the demand for intermediate goods by large companies decreased, leading to a decrease in the production of finished goods by large companies, leading to a vicious cycle. The report analyzed that as the production of small and medium-sized enterprises and large corporations decreased, jobs, investment, and consumption all fell.
The report also pointed out that increased regulation has dragged down various indicators across the economy. According to the report’s estimates, over the five years of the Moon administration, real GDP decreased by 23.1 trillion won (-1.3%) and total real consumption decreased by 11.2 trillion won (-1.0%). Total real capital fell by 184 trillion won (-2.7%), and real facility investment fell by 4.5 trillion won (-2.7%). Private sector jobs disappeared by 188,000 (-0.7%).
Ultimately, a vicious cycle occurs in which the increased number of public officials leads to increased regulations, and the regulations lead to the contraction of small and medium-sized businesses and large corporations, dragging down various real economic indicators. The report emphasized, “The increased number of civil servants has a negative impact on the overall economy,” and “There are some positive effects of increased welfare gained from regulation, but this is all offset by the negative effect of a decrease in corporate production.”
Meanwhile, PieTouch Research Institute obtained these results by substituting the dynamic general equilibrium model of Robert Lucas, winner of the Nobel Prize in Economics, into a distribution chart using the proportion of civil servants and the product market regulation index of 31 countries in the Organization for Economic Co-operation and Development (OECD) from 2008 to 2018. It was explained that it was derived.
▲ Growth rate in the number of civil servants in previous governments. ⓒFighter Chi One
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2023-09-12 08:02:32
