Tag: economy

It looks like there will soon be a lot of job openings in the government sector of South Korea:

The government has pledged to create 810,000 jobs in the public sector as a means to help young people struggling in the tight job market.

The Presidential Committee on Job Creation unveiled the plan as part of a five-year road map Wednesday.

President Moon Jae-in, who presided over the meeting, said the nation’s top 30 business groups will increase hiring by 5.6 percent this year.

On top of creating more jobs on the public sector, Moon called for private companies to join the campaign to hire more employees. “Hyundai Motor converted 7,000 subcontractors into regular workers. KT, Hanwha, POSCO and Doosan Group will also join the campaign to create more jobs,” he said.

Moon said the government will support innovative companies that actively hire more young people.

Under the plan, the government will create 340,000 jobs in the social services sector. It will start by adding 170,000 jobs in child care and nursing this year, for which there is a high demand.

An additional 170,000 positions will be created in the culture, sports and environment sectors.

The government will add 100,000 more police officers, 74,000 position in firefighting, social welfare and livestock disease control, and 174,000 in local-level civil servants.  [Korea Times]

You can read the rest at the link, but the ROK government has no funding plan for this hiring spree which means it will likely just be deficit spending.

Courtesy the Wall Street Journal… pic.twitter.com/Diauhi7EV1

— Jodi (@jodi_katherine) July 8, 2017

I have always thought that South Korea is sitting on a massive real estate bubble considering all of its empty apartments that so many people have borrowed money invested in.  According to this article the debt problems in South Korea is far worse than just the real estate market:

One of the important aspects that gets missed about Korean exports is their overall lack of diversity. About 48 percent of all Korean exports consist of electronics and related components while 31 percent are transportation goods (cars, boats, and related parts). A game-changing shift in the playing field for any product area could spell a slow but steady downward spiral for the entire Korean economy. Even a 10 percent drop in exports would literally shrink the economy by 5 percent, costing tens of thousands of jobs that ultimately depend on export revenue, exacerbating the already high underemployment rate of 14 percent and youth unemployment rate of 9 percent.

With a retinue of Chinese firms like Huawei and Oppo hot on the heels of Samsung, a potential decline becomes even more plausible considering the fact that Korean corporate culture is not always the most favorable for fostering the development of next-generation ideas and technology, often the easiest (and sometimes only) way for technology companies to remain competitive. This lack of forward thinking is most striking in the clean energy field, where Korea has been completely left out of the latest developments, despite its global reputation for being a technology powerhouse.

Another key area of concern is corporate debt. South Korea’s total corporate debt is worth about 171 percent of its GDP. Although this high percentage is not unique to Korea (the U.S. and China have about 304 percent and 169 percent, respectively), Korea is more susceptible to adverse consequences for a number of reasons. The first is the high prevalence of “zombie companies,” corporate entities that have been unable to repay debt for at least three years running. It is estimated that about a quarter of all Korean corporate debt is held by zombie companies, unlikely to ever be repaid.  [The Diplomat]

You can read more at the link.

Obviously the sanctions put on North Korea are not working when Dr. Andrei Lankov writes about the large economic expansion Kim Jong-un has helped to usher in during his first five years of ruling North Korea:

Next month it will be five years since the sudden death of Kim Jong-il led to the second dynastic transition in North Korean history. Kim Jong-un’s reign is approaching the five-year mark, the length of a presidential term in many modern democracies, so it is probably a good time to say what we think of the young North Korean leader.

To an extent, we can see the directions that Kim Jong-un wants to take and the trajectory that he wants to steer his country toward. I would dare to describe Kim Jong-un as a modest, perhaps hyper-cautious, but rather determined reformer in economic matters. Unfortunately, his foreign policy is difficult to appraise in anything but a critical fashion: it is quite likely that, in the long run, his diplomatic blunders will be his undoing.

But let’s start with the good news. In the last five years the North Korean economy has grown faster than any time since the early 1980s. Economic statistics are murky, speculative and controversial, but the majority of inside observers (diplomatic staff in Pyongyang) tend to estimate growth as being 3 percent to 4 percent per annum. This is much better than anything North Korea has seen since the 1980s, if not the 1970s. The results of such growth are felt through the whole of society, though the results are highly unevenly distributed. [Korea Times]

You can read more at the link.

It is amazing how interconnect the world has become when Britain leaving the European Union is having financial ripple effects across the entire world to include in South Korea:

Korea’s stocks and currency plunged as investors panicked over the possible fallout of Britain’s surprise vote to exit from the EU, dealers said.

Analysts said growing uncertainties on global financial markets, triggered by the Brexit, will overshadow the sluggish Korean economy. They ruled out any immediate huge direct impact on the real economy, but said it will weaken overall investment and consumer sentiment.

The benchmark KOSPI closed down 3.09 percent at 1,925.24 points. The tech-loaded KOSDAQ market plunged 4.76 percent to 647.16.

The won tumbled, closing at 1,179.9 won against the dollar, losing 29.7 won from the previous day.

Analysts said the Seoul stock market will remain weak for the time being on growing uncertainties in global financial markets. [Korea Times]

You can read more at the link.

Over at Rimjin-gang they have an interview posted with one of their North Korean contacts in regards to the recent Workers’ Party Convention.  The interview concludes with the North Korean explaining why the Kim regime will never implement Chinese style reforms that would improve the well being of the people:

Q: What is your expectation from Kim Jong-un regime?

A: I hope that they would open the door like China. Frankly speaking, if they do so, there would be no people who flee from their hometown (North Korean defectors). I don’t know why they fear so much about opening, or reform. While drinking, an official, one of my acquaintances, said: “If we open like China, we would be overthrown. So the top never open our door.”

Q: Do you mean that they don’t try to reform since they know their regime to be overthrown even if the opening would bring better off for the people?

A: Absolutely! Those son-of-bitches (Kim Jong-un and his followers) think that they should survive to the last. That is why they don’t. (open the door)  [Rimjin-gang]

You can read more at the link.

Marmot's Hole Podcast: South Korea World #1 For Innovation https://t.co/WIIgxKEXme

— koreabridge (@koreabridge) January 28, 2016

It appears the generational divide in South Korea is getting worse as young people are now describing themselves as the “give up” generation.  Imagine if Koreans after the Japanese colonization and the Korean War decided to “give up” where would Korea be today?  Instead they worked extremely hard and built the country we see today that the younger generation is complaining about:

The younger generation have had to give up so many things that they are now calling themselves the “n-Po” generation. University student Chan-mok Lim, 25, said, “Myself and a lot of my friends are working part-time jobs to pay for tuition. If when we graduate there wouldn’t be a problem finding a job, we could smile through the difficulties we have now. But the reality is that when we graduate, finding a job will be a real problem. Even for those friends who have found a job, they worry about getting married. The ones who got married, they worry about how to buy a home. We are calling ourselves the ‘n-Po‘ generation because we are giving up all the things that are of value in life.”

The barriers young people are facing are reflected in their self-depreciating language. Internet communities made up of young people are creating new slang at a fast pace. Words alluding to current slang such as “dirt spoon” in comparison to “golden spoon” (someone who was born in a wealthy household). “Dirt spoon” refers to young people who grew up in a poor home, and have little financial support.  [Korea Observer]

I think this line from the article sums up quite well what is happening:

Kim Su-han, professor of Sociology at Korea University, “Looking at the situation here the ‘whining strategy’ becomes rampant. Young people who cannot enjoy any benefits in life are feeling angry or disenfranchised and have taken to mockery and self-depreciation. The older generation is recognized for their hard work, but the younger generation is more known for inheritance than hard work when it comes to achieving success. This way of thinking reflects the difficulties young people face today.”

You can read the rest at the link.

I think the concentration of wealth that you see both in the ROK and the US has to do with crony capitalism where politicians are serving business interests more than the public at large:

The top 10 percent of South Koreans control 66 percent of the country’s wealth, with the inequality gap becoming more acute over time, a recent report showed.

According to the report by Kim Nak-nyeon, an economics professor at Seoul’s Dongguk University, Asia’s fourth-largest economy is encumbered by a sizable difference in wealth between the haves and have-nots.

While the rich monopolized wealth that includes both financial and property holdings, the lower 50 percent only accounted for 2 percent of the country’s assets.

The scholar, who based his findings on public data released by the National Tax Service from 2000 through 2013, said the size of wealth controlled by the top 10 percent started growing in the 2000-2007 period, before the global financial crisis, with the average wealth held totaling 624 million won (US$544,500).  [Korea Times]

You can read the rest at the link.

What I find most amazing about this report is that Germans on average work four months less a year than Koreans.  This just shows how unproductive the hours by Korean workers likely are when Germans are able to have a manufacturing and export based economy like Korea without the need for long hours:

Company employees and self-employed Koreans worked an average of 2,124 hours per person last year, second only to Mexico, at 2,228 hours.

Koreans work 354 more hours every year than the OECD average of 1,770. This calculates to 6.8 more hours of work each week.

In addition, the average number of hours worked by Koreans rose by 45, up from 2,079 hours in 2013.

Korea had the highest average number of working hours until 2007 when Mexico exceeded this.

The lowest average of working hours is in Germany, at 1,371 hours a year. This is equivalent to eight months of working hours in Korea.  [Korea Times]

You can read more at the link.