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South Korean Leader Shakes Up Finance Team

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South Korean President Moon Jae-in’s pick to be the new finance minister, Hong Nam-ki, shakes hands with a journalist at his office in Seoul on Friday.


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SEOUL—South Korea’s leader replaced his top economic policy makers in response to concerns about a weakening economy and differences among senior officials over how to revitalize growth.

President Moon Jae-in has come under pressure in recent months as public discontent has spread about a bleak job market and slowing momentum. So far, the government’s prescribed medicine—big increases in public-sector hiring and the minimum wage—hasn’t proved an elixir.

Mr. Moon on Friday removed the finance minister and his senior adviser for policy affairs, who had clashed over economic policies over the past year and a half. The departing finance minister had called for changes to the president’s pursuit of income-led growth.

The new appointees, Hong Nam-ki and Kim Soo-hyun, are tasked with reviving the economy by raising wages and household incomes to boost domestic demand.

“Today’s appointments are intended to strongly promote efforts to build an inclusive nation while maintaining the Moon administration’s philosophy and basis,” said Yoon Young-chan, the president’s chief spokesman.

South Korea’s central bank last month slashed its growth forecast to 2.7% for this year from 3.1% expansion last year. Mr. Moon has said that he fears the economy may be stuck in under-3% growth—well below the pace of a generation ago, when Seoul’s economic transformation earned it the label, “Miracle on the Han.”

The export-led economy faces numerous challenges, among them the rise of global protectionism. Many leading manufacturers are relocating overseas and facing competition from Chinese rivals. The South Korean growth model, which has relied on a handful of conglomerates, is no longer creating as many jobs as it once did. In addition, the economy has been overshadowed by North Korea in the administration’s priorities.

Lee Ju-young, a 26-year-old job seeker, contrasted her fortunes with those of her father, who she said was employed right out of college.

“For my parents’ generation, if you followed certain steps you could get a job, secure income, and have a family. For us, the designated steps no longer work,” she said.

The unemployment rate improved slightly to 4% in September from an eight-year high a month earlier, but job growth remained weak. Youth unemployment in particular has remained stubbornly high, more than double the headline jobless rate.

Meanwhile, hefty minimum-wage increases—11% next year, following this year’s 16% rise, have angered some business owners. Critics say many mom-and-pop stores have been forced to reduce employment or opening hours to counter rising labor costs.

Lee Sang-jae, a macroeconomy analyst at Eugene Investment & Securities, said the reshuffle of the economic team wouldn’t result in major policy shifts. “Mr. Moon’s policy will stay on course and hardly change, just with a second line of its original architects at the helm,” he said.

Meanwhile, Mr. Moon’s approval ratings have fallen for four weeks to 54%, according to a Gallup Korea poll Friday. Respondents cited the president’s management of the economy as their top concern.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

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