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Lee vows to revitalize S Korea

South Korean president-elect Lee Myung-bak repeated his vow to promote a "business-friendly atmosphere" as he encourages corporate investment and "actively" seeks foreign investment to boost the country's economy.

Lee made the comments at a press briefing in Seoul yesterday. Lee has repeatedly pledged to revitalize the economy as emerging Asian rivals steal manufacturing jobs and markets in the developed world struggle with credit woes.

Growth has averaged just over 4 percent a year over the past five years -- not bad for one of Asia's wealthiest economies, but far short of the expectations of South Koreans used to more than 7 percent for decades.

Analysts say Lee must, as a priority, chart a long-term growth strategy for the country, strive to create better-quality job opportunities, bridge the divide between rich and poor, and develop service sectors that have been neglected by his predecessors.

South Koreans are particularly nervous over whether their economy, Asia's fourth-largest, can pick up at a time when fast-growing countries with low labor costs such as China and India are taking over the production of a variety of goods.

Korean companies "face the prospect of having to run just to stay still in an increasingly competitive and globalized manufacturing industry. These developments will pose challenges for Korea going forward," said Daniel Melser, an economist at Moody's Economy.com in Sydney.

"With the country now wealthier, and the economy bigger and more diverse, just growing exports won't be enough. A greater focus will be required on the domestic economy and in particular on productivity in the service sector," he said.

With Samsung Electronics, LG Electronics, Hyundai Motor and POSCO, South Korea boasts leading brands for computer chips, mobile phones, flat screens, cars and steel products, but it has nothing comparable in financial and business services.

South Korea's jobless rate stands just above 3 percent, among the lowest in the world, but the quality of jobs has deteriorated, with fewer people lucky enough to have full-time positions.

"Also the unemployment rate is low because Koreans opted to drop out of the labor force for want of adequate jobs," said Frederic Newmann, an economist at HSBC in Hong Kong.

"The incoming administration should focus its energy on liberalizing the labor market, strengthen vocational training, and provide incentives to employers to hire more aggressively," he said.

Foreign companies have urged South Korea to make the labour market less rigid, so that employers can hire workers and lay them off more easily when business conditions deteriorate.

Lee may find it hard to reconcile the conflicting demands of companies needing flexibility and workers craving security.

South Koreans are increasingly concerned as employers become reluctant to hire full-time, permanent workers as they try to compete with countries flush with cheap labor such as China and India.

Government data shows almost 9 percent of those in employment worked for 30 hours or less per week last year, up from about 7 percent five years earlier and about 4 percent 10 years before.

Lee won a landslide election victory this week to become the nation's first president from a corporate background, ending 10 years of rule by civil-activist leaders.
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