Tag: economy

The 52 hour work week is really just 40 hours like in the U.S. but has an additional 12 hours of overtime. I can understand how limiting workers to only 12 hours of overtime can constrain employers and workers in some industries:

The country currently adopts a 52-hour work week — 40 regular hours with 12 hours of possible overtime. It was introduced in 2018 by the liberal Moon Jae-in government to reduce the maximum week from 68 hours at the time to 52. 

Citing its latest survey, the ministry said the 52-hour workweek has substantially taken root, but some industries have still experienced management problems due to a lack of flexibility in working hours and difficulties meeting deadlines.

In the survey, 48.2 percent of the respondents said the 52-hour workweek has helped relieve matters stemming from work overload, but 54.9 percent said the existing system has failed to reflect the characteristics of some industries. 

In particular, both workers and employers in the manufacturing and construction industries as well as the medical, research and engineering sectors said overtime management of the current workweek needs to undergo changes.

Accepting these survey results, the ministry will maintain the 52-hour workweek, while at the same time beginning discussions with industries that have experienced difficulties abiding by the current rule, seeking to come up with complementary measures that could improve flexibility.

The ministry will also prepare measures aimed at resolving workers’ health concerns that could be affected by the long work hours at those industries.

Korea Times

You can read more at the link.

U.S. service members in South Korea continue to gain continuing buying power as the won continues depreciate against the dollar:

The Korean won has weakened severely against the U.S. dollar, sending its value to 1,362 won per dollar as of Sept. 2 ― the lowest since April 2009. Excluding global financial crisis periods, the currency value is the lowest since April 2001 when the global economy had just started recovering from the IT bubble recession.

The won-dollar rate was once below 1,300 right after the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) meeting, on the hopes that the Fed might pivot to decelerating the pace of its rate hikes. The dollar index (DXY), measuring the dollar value against six major currencies, came down to 105 by the end of July from the previous peak of 108. Now the index has moved up even further beyond 109, which is the highest since 2001.

The resurgence of the dollar index has stemmed from the weakening euro ― now below parity ― as well as concerns that the Fed will keep raising rates aggressively. In addition, the weakening Chinese yuan, amid China’s sluggish recovery and the central bank’s rate cuts, has caused the Korean won to weaken further. 

Korea Times

You can read more at the link.

Economic conditions in Korea may not be good, but it good for U.S. troops stationed there that are getting a great exchange rate against the won:

Current economic conditions are “severe,” the presidential office said Tuesday, as the Finance Ministry warned speculators not to pile into the won trade, with the currency now at levels not seen in more than 13 years.  
   
“Internal and external economic conditions, like the weak won and the growing trade deficit, are severe,” presidential spokesperson Kim Eun-hye said on Tuesday.  
   
Earlier that day, President Yoon Suk-yeol said he will address the economic risks in an emergency meeting and make sure the falling won “does not impose negative impacts on our market.”

The won broke 1,340 to the dollar for the first time in 13 years and four months on Monday. It continued to fall Tuesday, hitting 1,346.60 won intraday. The currency has declined more than 10 percent this year.  
   
A declining won puts Korea in a tough situation as households are weighed down by debt and being squeezed by inflation. Raising rates would held stabilize the currency but threaten the housing market, while inflation could remain high if rates are increased too slowly.  
   
The brewing economic crisis is as much a test for the president, who is already battling a low approval rating and has few tools at his disposal, as it is for the central bank. 

Joong Ang Ilbo

You can read more at the link, but the current economic problems is probably going to only further drop President Yoon’s approval ratings.

Good luck trying to get people to believe this, though the inflation crisis I think is starting to make realize that giving out free money maybe is not a good thing:

 President Yoon Suk-yeol sounded the alarm on the country’s fiscal health on Thursday, saying people should wake up from the “fantasy” that increasing government spending will automatically improve people’s livelihoods.

Yoon made the remark while presiding over a fiscal strategy meeting with members of the government and the private sector at Chungbuk National University in Cheongju, 112 kilometers southeast of Seoul.

“We must wake up from the fantasy of fiscal universalism,” Yoon said, describing it as the belief that if the government spends more of its budget, “automatically, the economy will grow and people’s livelihoods will improve.”

“In order to overcome the people’s livelihood issues and fiscal crisis that we face, the government has to be the first to tighten its belt,” he added.

The finance ministry unveiled plans to reduce the fiscal deficit to a size equivalent to less than 3 percent of the gross domestic product (GDP), from the 5.1 percent estimate for this year, and to cut the debt-to-GDP ratio to around “the midpoint” of the 50 percent range by 2027 to help slow the pace of the national debt.

Yonhap

You can read more at the link.

It is amazing that a retail U.S. video game company GameStop could have a major effect on the South Korean economy, but it has:

Yet, despite media hype about imminent bankruptcies of short-selling hedge funds and the historic win of small investors against Goliath hedge funds, statistics by S3 quoted in a recent CNBC report showed that most short-selling positions held by hedge funds are still intact, holding onto their bearish perspective on the stock’s future. 

A swarm of retail investors gathered on social media ― through Reddit’s WallStreetBets and Twitter messages ― expressed their anger over the unlevel playing field as evidenced by Robinhood and other U.S. brokerage firms’ unexpected suspension of the stock’s trading during the last two trading sessions last week. 

While U.S. regulators and politicians announced their plans for investigation and hearings on the matter, whatever will be the final result of the battle ― plunge of the stock price or short sellers’ major losses from a possible short squeeze ― one thing for sure is that now could be the start of a watershed moment.  (………..)

There was a massive selloff of Korean stocks in the KOSPI index at Friday’s session, net-selling 1.4 trillion won ($1.25 billion) worth of stocks, dragging down the nation’s benchmark index. 

“At this point, it’s very hard to predict how this event will turn out, as no one can be sure about future directions by countless retail investors on a global scale and numerous hedge funds’ moves as well,” Lee Hyo-seok, an analyst at SK Securities, told The Korea Times. 

“One thing for sure is that the market volatility is bound to increase for the time being; some say this would bring a major financial crisis, but as of now their assertion lacks substantial or concrete evidence at all. Thus at this point, we can only say the market uncertainty is growing,” the analyst said cautiously, adding that foreign money hasn’t yet escaped from ETFs following the Korean indexes. 

Other stock market researchers say while it’s too early to say whether the bubble will soon pop, investors’ investment sentiment preferring risky assets will be somewhat wavered. Some market experts say concerns about the increased volatility would bring financial authorities’ earlier tapering measures, which could add more volatility in the end.

Korea Times

You can read more at the link, but the GameStop saga has really exposed how the hedgefunds have gamed the financial system and it will be interesting to see how this unfolds.

Anyone surprised that the Moon administration is blaming the poor Korean economy on the coronavirus? They are basically arguing that the Korean economy was on the verge of turning around until the coronavirus hit:

President Moon Jae-in ordered his cabinet on Tuesday to mobilize all available “special” means to handle the “emergency economic situations” attributable to the continued spread of the new coronavirus.

“Emergency situations require an emergency prescription. The current situation is much more serious than [we] thought,” Moon said during his opening remarks during a weekly cabinet meeting at the Blue House. “It is the time when special measures are absolutely necessary to use every possible means that the government can mobilize.”

Moon’s call reflects his resolve to minimize the epidemic’s impact on the Korean economy, which the government said was on the cusp of revival starting in the last quarter of 2019.

“This is not enough,” he added. “In order to respond to the emergency economic situations, I want you to exert policy-related imagination that goes beyond expectations with no restrictions.”

He cited the expansion of tax incentives and regulatory reform to promote corporate investment, special financial support for small- and medium-sized firms and measures to relieve tiny shop owners of rent burdens.

Joong Ang Ilbo

You can read more at the link.

Anyone surprised by this? I hope not because it is simple math that employers would cut back on employees if labor costs became too expensive due to forced minimum wage increases. This is especially true for all the mom and pop shops you see in South Korea:

The steep increase in the minimum wage caused 42,000 full-time jobs in convenience stores to disappear in 2018 as they were unable to pay the increased salaries, the Korea Association of Convenience Store Industry said Tuesday.

According to the association, the average number of jobs available per convenience store plummeted to five, down from 5.8 in 2017. The number of full-time staff who worked more than three to four days per week and received monthly wages fell from 2.3 to 1.1.

Chosun Ilbo

You can read more at the link, but young people in South Korea are already having a hard time finding a job and now even a convenience store job is harder to get.

Korea’s economic news continues to get worse:

Korea’s exports will likely decline by 10.2 percent this year from the previous year, according to the Korea International Trade Association (KITA).

The trade lobby said in a report Thursday that it expects outbound shipments for this year to record $543 billion due to global trade friction and tumbling semiconductor prices, making it fall far short of the record milestone the country achieved last year of $604.9 billion.

Exports have recorded on-year declines since December last year.

“Exports will drop by around $60 billion compared to last year, and around $30 billion [of the drop] is due to semiconductor prices that have fallen by 40 percent,” said KITA CEO Kim Young-ju during a briefing at the KITA headquarters in Gangnam District, southern Seoul. “On top of this, petrochemical prices fell 10 percent from the previous year due to falling global crude oil prices.”

Joong Ang Ilbo

You can read more at the link.

The Chinese government must be feeling some economic pain if they are now resorting to pushing nationalism to defend themselves:

Among China’s most surprising responses to the trade war has been its reluctance to use its vast state media empire to rally the home front. That’s changed since U.S. President Donald Trump’s latest tariff barrage.


In recent days, the once-banned phrase “trade war” has roared back into widespread use in Chinese media. Meanwhile, official news outlets gave high-profile play to commentaries urging unified resistance to foreign pressure, including an editorial from the nationalist Global Times calling the trade dispute a “people’s war” and threat to all of China.

Such sentiments have found an eager audience, with a state television video vowing a “fight to the end” attracting more than 3 billion views since Monday. The clip was the most-read piece on China’s Twitter-like social media platform Weibo earlier Tuesday.

The rhetorical shift underscores the risks that China’s Communist Party veers toward a more nationalistic position as the trade war drags on and weighs on economic growth. Chinese President Xi Jinping, like Trump, has promised to rejuvenate his country and can’t afford to look weak in the face of foreign power.
So far, China’s state media have sought to tamp down the kind of patriotic passions that fueled a backlash against Japanese interests when a territorial dispute flared in 2012. Even now, state media commentaries focused the blame on the U.S. government, rather than the country as a whole.
For instance, a commentary published in the Communist Party’s flagship People’s Daily newspaper, avoids any mention of Trump’s name and refers only to “certain people in America who brood over the so-called massive trade deficit,” said David Bandurski of the China Media Project, an independent research program affiliated with the University of Hong Kong.

Bloomberg

You can read more at the link.