South Korean President Lee Myung-Bak called Monday on world leaders to address the gap between rich and poor, warning that growing disparities could lead to social unrest.
Speaking before a summit of the Group of 20 economies, Lee drew lessons from South Korea’s experience during the 1997 Asian financial crisis when painful reforms brought social tensions but arguably helped the emerging economy cope during the latest global tumult.
Citing figures from the International Labour Organisation, some 27 million people have lost their jobs since the global crisis hit in 2008, which “undermines economic dynamism” especially as many are young, Lee said.
“With the widening gap between rich and poor, there is also a possibility that it will lead to social unrest. So for the market economy to continue to grow, we must tackle this issue,” Lee told a business forum ahead of the summit in the Mexican resort of Los Cabos.
The two-day summit will look at ways to steer the global economy out of its latest doldrums. US President Barack Obama and French President Francois Hollande have been outspoken in advocating growth, while German Chancellor Angela Merkel and British prime minister David Cameron have put a focus on fiscal responsibility.
“Opinions are mixed between austerity and growth, but I do not believe that the two are at odds with each other,” Lee said.
“Each country, in line with its national circumstances, must find the right balance between growth and austerity. What’s most important is restructuring to regain the growth engine,” Lee said.
Lee said that many countries will have to take “painful and politically unpopular” decisions. He saluted Sunday’s election in crisis-ridden Greece, where voters elected supporters of a controversial IMF and EU bailout package.
“In overcoming the eurozone crisis, I hope that such results will have a positive impact on the recovery,” Lee said.