Over The Hurdles Toward The 21st Century
Jung Kyung Sung, Consul General,
Consulate General of the Republic of Korea in Honolulu
I. Modern Korea before the economic crisis
Most participants, present today, will know well about Korea. But I would like to briefly review the traits of Korean Society that formed since the beginning of the 20th Century as the Korean society is likely the one society that has experienced the fastest change in Asia.
1. Korea, an egalitarian society
Many people may think Korea is a land of morning calm or a conservative Confucian country. Certainly Confucianism was the national guiding philosophy for the Yi Dynasty that lasted from 1392 to 1910. During that time, Korea was a Confucian country faithful to Confucian teachings. Since the fall of Yi Dynasty, Korea has undergone tremendous changes, such as: Japanese occupation, liberation from Japanese rule, Korean War, downfall of the 1st government by student uprising, authoritarian rule by military governments and finally democratization.
Repeated big changes that turned Korean society up side down have eliminated old social hierarchy and many old traditions. That made Koreans more egalitarian and more receptive to changes. For example, family pedigree, which was once as valuable as one’s life is no longer important. In religion, Christianity has seen the fastest growth in Korea, converting about 30% of the Korean population.
2. New symbol of social status
In the fast changing society, Koreans have found new symbols of social status: education, money, job and social fame. Especially, education. Koreans have caught the education fever so strong that a considerable number of students attend well know universities all over the world. With almost 1000 institutions of higher education, education has been a strong social asset for the rapid development of the Korean economy. But as Koreans put more importance on the external and visible achievements, overheated competition in the society became a problem.
3. Nationalism
Being homogenous people, Koreans may have a tendency to be nationalistic. Because of its geographical location; sharing a border with China and its close proximity to Japan over a narrow strait, Korea was invaded hundreds of times in its history by neighboring powers, whenever they surged. Those repeated invasions have strengthened the nationalism of the Korean people for a long time. Japanese occupation in the 20th century, again, stimulated the nationalism.
Nationalism has been a strong driving force in the development of Korean economy. But it had some undesirable effects like showing emotional response to international issues, chauvinistic way of thinking, especially in the economic field.
4. Impact of economic development by the planning economy.
Since President Park Chung Hee came to power in 1960, economic development had been carried out in accordance with economic plans made by the government. Through a series of 5-year economic plans, Korean industry and society were modernized. For the successful implementation of the economic development plan, President Park thought it necessary to reform the mentality of the Korean people. Best known among them may be "Can do spirit". To motivate Koreans, who were resigned to poverty after the Korean War, he stressed that if we have the will, we can do it. Henceforth, this spirit has had considerable influence on the activity of Koreans.
Next, out migration to foreign countries. Koreans were traditionally quite sedentary people. I think this is where the name hermit kingdom originated. But in the 1960's, Koreans suddenly started to move to other countries. Many went to Vietnam and Middle East to do business and to work as laborers. Others immigrated to North and South America for a better life. In view of the fact that Korea had only one resource at that time, manpower, it was quite opportune that Koreans started to travel abroad to learn technology and to make money necessary for economic development. Ever since, Koreans think of the world as their working place and are scattered all over the world.
Finally, the role of the government may attract curiosity. It is quite natural that the power of government must be strong in the planning economy. Indeed the role of the government left a deep impact on all aspects of life of Korean society. For the rapid economic development, efficiency in administration was important. To achieve this, military style administration was introduced into government and later to private sectors. In this type of administration, quantity was stressed and quality was of second importance. Government used many kinds of means to keep private sector faithful to the economic plan. Carrots and sticks were used. Companies following the economic plan were awarded government assistance including financial support even they made deficits. This sowed the seed for the future embarrassment. In spite of that, the planning economy achieved unprecedented economic success, but it also left undesirable side effects like excessive government intervention in private sectors, materialism, and moral confusion.
5. Labor movement
In its economic development, Korea has been heavily dependent on its relatively cheap and resourceful labor, as manpower was the only resource Korea had in abundance. Through the authoritarian government, labor movement was discouraged for sustained economic development.
During the brief period of democratization in 1979-80, labor movement became radical in some parts of Korea, which expressed the feeling of the Korean laborers in the authoritarian system. As Korea entered into the age of full-fledged democratization in 1987, labor movement became active again. The Korean people showed their wisdom at the beginning stage of democratization in that they successfully managed the strong energy emanating from the decades of oppression. However, in the field of labor movement, some degree of radicalism prevailed. Government and business groups had to take cautious action, facing the possibility of the labor movement being allied with radical student movements.
Through this labor movement, wages grew rapidly. In the later years of President Roh Tae Woo’s government, wage hikes seemed to grow unreasonably fast. At a time when other countries like America was trimming its economy to restore its economic competitiveness, labor, the most important factor in Korean economy, was changing itself from the source of success to a problem maker.
After the inauguration of the Kim Young Sam Government in 1993, labor movement became calm. However, this did not mean that the labor movement became weaker. Rather labor movement secured enough power to achieve its goal without many radical struggles. Labor was partly responsible for the decline of Korean economy in those days.
6. Relations between South Korea and North Korea
Since the end of Korean War, hostility between the two Koreas was high for two decades. Maybe it was the 1972 Joint Communiqué between the South and the North that Started to turn the war mentality of the Korean people into a kind of strategic thinking, as Koreans find interest in the reasonable way toward unification.
Some Koreans believe that President Park Chung Hee believed that overwhelming economic power of the South will assure the final victory of the South in its confrontation with the North while Kim Il Sung believed in the victory by absolute superiority in military power.
Whatever the intention of President Park was in the announcement of the Joint Communiqué, it is certain that he understood that the Korean problem should be solved by peaceful means over a long period of time.
All the presidents after President Park had their respective unification formula and policy toward North Korea. All the policies are comprised of two basic elements, which is national security and solution of the problem by dialogue. Most of the time, government position swayed between the two elements up to the prevailing situation and public opinion. By common sense, it may be true that most of the presidents wanted to make some achievements in South-North relations. In that sense, most of the presidents were peace oriented. But whatever the ambition of the presidents was the North disturbed the South from time to time by making provocative actions that stimulated conservative public opinion of the South to turn the direction of the policy toward emphasizing national security and bellicosity of the North. Public sentiment in the South is ambivalent toward the North; they have sympathy toward them for their suffering, but at the same time deep distrust for their hostile attitude toward the South.
For a brief time with the fall of communism around the world, the south and the North worked together to work out basic groundwork for the future of Korean Peninsula, 1991 South-North Basic Agreement. Soon this process was stopped because of the nuclear inspection of North Korea.
North Korea’s economic failure aggravated by its international isolation following the collapse of communism in Europe has caused serious food shortage in North Korea. For sometime, North Korean economic failure brought heated debate on the possibility of the North Korean collapse all over the world. Apart from unification, many Koreans believe that competition between the South and North is over. Although their fear of North Korean military threat remains, it is reduced a little.
7. Korea and international society
For sometime after the Korean War, Korea was obsessed by the memory of Japanese occupation and North Korean invasion. As a result the attention of the whole nation and government was focused on national security. The USA, as a provider of defense and economic aid was by far the most important nation in its relations with other countries. European and some Asian nations who participated in the Korean War were next.
Entering into the 1960's, the scope of interest of Korean diplomacy broadened. The 1st momentum was the emphasis of economic development by President Park Chung Hee. Soon relations with Japan were normalized and became an important component in Korean diplomacy. The 2nd was the influence of the newly emerging Non-aligned Movement. The 3rd world countries were heightening their voices in the international arena and did not hesitate in intervening in the problems of Korean peninsula. In order to defend its position and secure the upper hand in its confrontation with the North, South Korea started active diplomacy toward the 3rd world countries. Soon, Korea found that it could expand its economic activity to the 3rd world countries where new opportunities were waiting for determined people. Koreans ventured into Vietnam, Middle East, Southeast Asia and South America. In the later part of 1980's Eastern Europe became another stage for the Korean activity. And finally China and Vietnam normalized relations with South Korea. Now Koreans are everywhere and all the nations of the world have substantial relations with Korea.
II. Economic Turmoil
In November 1997, economic turmoil instantly struck Korea. There are many theories explaining the cause of economic downturn. Many of the theories may be right as downturn of the Korean economy was caused by many reasons.
1. Foreign Currency Crisis
Korea was hit hard by the foreign currency shortage that started in Thailand and expanded to other Asian countries.
2. Lack of preparation for the changing world.
The Korean government and its people were not fast enough in perceiving the change of economic environment called globalism. Government did not take any preventive steps when the economic crisis took place in Thailand. Thus, when it reached Korea, Korea was taken by surprise.
3. Excessive confidence of the Korean Government and people
The Korean economy grew rapidly since 1960's for over three decades, except a brief period in 1980. In this situation, government, business and people thought the Korean economy is invincible. Koreans spent, invested and borrowed excessively.
4. Loss of economic competitiveness
Through the decades of rapid growth, Korean economy came to have thick bubbles in many fields. Real estate, labor, commodities and services were unreasonably expensive. Naturally, Korean economy was losing its competitiveness in the world market.
5. Structural problems in financial institutions and industry
Korean government, banks and big business have produced problems by their collaboration. Banks accumulated much non-performing loans while companies had too much debt. When open market was unavoidable, those problems surfaced.
III. Response of Korea
At the start of the economic crisis, Korea elected a new president. For the first time in Korean history, an opposition leader, Mr. Kim Dae Jung was elected president. In view of the fact that the new president was not part of the ruling party and that the economic crisis were caused by deep structural problems, it was easy to predict the response of Korean government to the economic crisis would be profound and wide-ranging reform. Changes would take place in every aspect of the society. Of course again, the most important would be economy and South-North relations.
1. Economic Reform
a. The philosophy of President Kim Dae Jung in economic reform
The two themes in his philosophy are democracy in politics and economy and globalism, the new tide of the world. By economic democracy, he means market economy in which fair competition becomes basic rule and transparency is guaranteed. World has changed. It is moving into the age of globalism where economic and cultural borders between nations will gradually disappear and competition will become boundless on a global scale. The planning economy that has guided Korean economy so far is useless. Korean economy has lost its competitiveness by thick bubbles, by fat organizations both in government and private sector, by irregularities produced by political-business collaboration and excessive government protection of domestic business. At this juncture, Korean economy should restore its competitiveness to overcome the economic crisis and secure its sphere of activity in the globalized world. For thorough economic reform, the whole society must be overhauled. Also the way of thinking must be changed.
b. Government reform.
With a view to create a government that is small, efficient and service oriented, the present government must be reformed mainly on three principles: downsizing, privatization and deregulation.
In the past when government controlled every aspect of society, government grew automatically. But in this age of global economy, bigger government means not only waste of budget but lack of adaptability to ever-changing circumstances.
At the inauguration of the new government, 24 ministries were reduced to 16 ministries and number of government officials will be reduced correspondingly. In 1998 and 1999, government officials in the central government will be reduced by 11% and provincial and local governments by 30%. In an effort to bring in competition and strengthen expertise in the bureaucracy, civilian experts will be hired.
In privatization, all the government organization, parastatal bodies and research institutions that can be managed more effectively by private management will be privatized. And those left under the government control will be merged and annexed and downsized to maximize cost efficiency. The core of the government reform is deregulation. For a long time in modern history, government has been controlling all segments of Korean society with strong power. In order to give government the power necessary many regulations were brought in. They form a network that often creates red tape and selfish confrontation between the government organizations. Also more regulation and control are apt to cause more corruption. To put an end to the domination of government and to create a service oriented government; this reform is carried out under strong supervision.
c. Economic reform
Main field of reform is economy and other reforms are designed to increase economic efficiency.
- Financial sector; as financial sector has been estimated as the weakest point in the Korean economy, the first phase of economic reform was focused on financial institutions. During the days of planning economy, private companies were requested to make investment and to run the company in accordance with government economic plan. Quite often, companies that followed the economic plan made deficits. To compensate the loss of the companies and to encourage the companies to follow government guidance, bank loans were arranged by the intervention of government. Some of the loans became bad loans and as economic planning continued non-performing loans accumulated. And in the process of arranging bank loans as a kind of reward, irregularities developed and aggravated financial status of the banks. Also management of banks was outdated.
For the recovery of the economy and to reform financial sector to be competitive in international competition, government took steps from the classification of the banks in accordance with its financial status. For the reform, government established Financial Supervisory Commission for the supervision and regulation of the financial firms.
Following the appraisal of financial status, the worst ones were closed. Precisely 5 out of 33 commercial banks, 16 out of 30 merchant banks, 6 out of 34 securities firms and 2 out of 8 investment trust companies were closed. Two commercial banks with the worst financial status received government investment after it was devalued to 10% and offered for sale to foreigners. Other banks were requested to heighten its reserve rate to BIS level of 8%. At present all the banks maintain 10-13%. Those banks that survived are looking at mergers, reorganizations and recapitalization in an effort to meet international competition. As for the non-performing loans, half of it will be eliminated by the middle of 1999.
Also in bank management, new management expertise will be introduced. One of them will be the American style system in issuing loans, away from traditional style of depending on mortgage, and the other will be utilization of professional mangers from foreign banks.
During the financial reform, Korean economy could not avoid depression because of the severe capital squeeze. However, since September 1998, government under agreement with IMF introduced steps to reinvigorate the economy. These steps seem to be quite successful so far and by all indicators the economy is slowly moving out of depression.
For financial reform, however, the government that had been free from deficits had to bear considerable amount of debts. If the Korean economy recovers in the near future, the debt will be well controllable. But if the depression persists for a long time, government deficit may become another burden for the Korean economy. This reform seems to be highly appreciated by foreign investors too in view of the fact that 1998 saw much bigger investment by foreign countries amounting to $8.8 billion. By the end of 1998, Korea secured $50 billion. With this, Korea is out of the foreign currency crisis. Its foreign currency exchange rate and stock price have stabilized during the past several months.
- Corporate Sector: Korean companies that grew following the economic plan regarded themselves a less private.
They pursued expansion more than increased profits. The focus of reform in this field is letting weak companies exit out of the market in accordance with the principles of market economy. Revision of bankruptcy law to facilitate exits of insolvent firms was completed in February 1998. Viable companies are requested to improve capital structures and corporate governance.
In the Korea economy, chaebols or big conglomerates have been the driving force for development. However, chaebols became too big and its business became too wide-ranging. Its fast expansion caused it fragile financial structure. In view of that chaebols control a big part of Korean GNP, the problem with chaebols is more complicated and sensitive than that of small and medium size companies.
Government suggested five principles for the reform of chaebols. In line with the principles, Korean chaebols are selling assets and rationalizing their business to improve capital structure and reduce over-capacity. They are voluntarily merging their subsidiaries and participating in business swaps with other chaebols. Through these swaps, chaebols will also be able to specialize in their respective competitive fields. In an effort to prevent unwarranted corporate expansion and to improve capital structure, government prohibited cross debt guarantees of the companies belonging to the same chaebol and ordered existing guarantees to be dissolved by March 1999.
With regard to improving corporate governance and enhancing management transparency and accountability, Korean firms were requested to appoint outside auditing committees. Also steps were taken to strengthen the voting power of the minority shareholders. Korean accounting standards were revised in December 1998 in line with international standards. Chaebols are requested to produce combined financial statements covering all of their affiliated subsidiaries. These changes are designed to enhance business valuation and increase transparency.
In addition to these steps, change of management from owner to professional management is encouraged. Also important is the change of attitude of government and people toward foreign companies and people. Before the economic crisis, foreign investment was regulated in order to keep businesses under the control of the government. But now, many profitable companies were sold to foreign investors. Real estate is open to foreigners. Foreign investment is welcome in every sector of the economy.
- Labor reform
Manpower that had been source of Korean economic development has been blamed for the past several years for the loss of the competitiveness of Korean economy. Though labor is not the only reason for the loss of competitiveness, it has been one of the reasons because of unreasonable wage hikes and occasional radical action that paralyzed economic activity. The aim of the government in this reform is modernizing employer-employee relations to secure smooth working relations between the two and restore labor competitiveness. In implementing labor reform, government established the tripartite committee composed of labor, management and political leaders.
Thanks to the cooperative efforts of the committee, the Labor Standards Act was revised in February 1998 to allow managers to lay off workers on the base of managerial need including business transfers and M&A’s. For the restoration of labor market flexibility, labor-leasing system was introduced to provide labor out sourcing as another option for employment adjustment. On the other hand, civil servants and teachers were allowed to form unions, a right previously denied.
2. South-North relations
As cold war was coming to an end all over the world, the South and the North moved to seek a new direction in their relations. That produced two major agreements at the end of 1991. The Agreement on Reconciliation, Non-aggression and Exchanges and Cooperation between the South and North and Joint Declaration of the Denuclearization of the Korean Peninsula. Soon the subsequent talks between the South and North for nuclear inspection agreements came to a stalemate and North Korean development of nuclear capability became focus of international politics. In an effort to overcome the bottleneck, the four party talks were proposed by South Korea and the USA. The preparatory talks for the first four party talks started in 1997 and talks were held on and off since then.
It was in such circumstances that President Kim Dae Jung was elected. The new administration introduced policy for the improvement of intra-Korean relations through promoting peace, reconciliation and cooperation with North. For these goals, following three principles were clarified:
a. South Korea will not tolerate any military provocation.
b. South Korea has no intention of unifying Korea by absorbing North Korea.
c. South Korea will promote conciliatory cooperation with North Korea.
As for the non-toleration of military provocations, it does not need much explanation in that the first step in maintaining peace in a situation like the Korean peninsula should be strong deterrence of war. In detail, strong national defense posture, corresponding response for military provocations and building a solid regime for maintenance of peace are contents.
As a first step toward achieving national unification by pursuing mutual and national interests through promoting inter-Korean cooperation and preserving peace and stability in the Korean peninsula, South Korea emphasizes the implementation of South-North Basic Agreement of 1991.
Reunion of the separated families between the two Korea is also important. What is more important at this juncture is not an immediate unification, but peaceful management of the divided territory.
To create a national community, in which democracy and market economy are respected, the North must change. For this reason, South Korea will continue to promote economic cooperation with the North under the principle of separating politics from economic cooperation. All intra-Korean issues must be solved between the two Koreas. South-North talks discusses the way to implement the 1991 Basic Agreement, while the four party talks tackles construction of a peace regime in the Korean peninsula. International support and cooperation are necessary for the improvement of intra-Korean relations and final achievement of unification.
In pursuing these goals, flexible policies are necessary, as South Korea must prove its goodwill and sincerity in order to dissolve North Korea’s suspicion. South Korea should be prepared to provide aid to North Korea with elasticity from a humanitarian viewpoint. Assisting the North Korean effort to solve their economic problems fundamentally by agricultural cooperation and activation of South-North economic cooperation should be considered. Construction of light-water reactor generator will be carried out without failure.
Also South Korea will have interest in the formation of regional security regime for the maintenance of peace and promotion of cooperation in Northeast Asia. No South Korean government took a real hard line policy toward North Korea. Occasionally, government took a strong position toward North Korea. Generally, it was temporary, after serious provocation by the North. But the policy of President Kim Dae Jung toward North Korea shows a more reconciliatory position and more sincerity in that it suggests a more detailed way of carrying out conciliatory cooperation policy instead of producing a sophisticated unification formula.
This change of policy may stem from:
a. Philosophy of President Kim who advocated reconciliatory policy throughout his political career.
b. A disengagement policy had been possible during the cold war days for South Korea, but now disengagement policy is impossible as North Korea has more dangerous means of trouble making such as: nuclear development and test firing or sales of missile/satellite. And neither China nor Russia is able to fully control North Korea.
c. In the new world of globalization, Korea must overcome the difficulties that originated from the remains of cold war. High tension between the two Koreas will hamper free and active international economic activity of South Korea, while heavy defense expenditure may weaken the competitiveness of the Korean economy. To survive and prosper in the globalized world, Korea must free itself from the yoke of cold war.
d. Through economic turmoil, Koreans have learned that their economy is not as strong as they had believed. Many Koreans have come to the conclusion that gradual assimilation of the South and North is preferable rather than early unification, which may bring economic havoc to the two Koreas.
e. South Korea has tried many policies toward North Korea. Reconciliatory policy, which keeps balance between national security and reconciliation measures, seems to be the only course left. At the same time it is true that the current North Korean economic situation is turning for the worst. The possibility of North Korea changing its attitude toward cooperation may be higher now.
f. Many South Koreans are ambivalent toward North Korea. But reports of food shortage, especially starving children move many South Korean hearts.
North Korea has shown two contradictory propensities in response to South Korea’s reconciliation policy. On the one hand, they are continuing their adventurous and provocative acts, like sending infiltrators and submarines to South Korea. On the other, they have accepted the proposal of South Korean tours of Kum Kang Mountain and other proposal of economic cooperation from a few South Korean companies. There are many kinds of interpretations for these contradictory responses from North Korea.
It is true that at times North Korean actions are illogical. They often prepared military action while having dialogue with the South. But this time the situation is different, in that, economically, the North no longer has anyone to depend on except South Korea and its allies. If I were to express my personal thoughts, I would point out the uniqueness of the North Korean regime.
The top priority of the North Korean leader, at present, will be maintenance of his power. If Kim Jong Il finds a safe way of changing the North Korean system, he will do it. Changing the present system may be extremely dangerous, while maintaining it, may not be a solution. To earn the necessary foreign currency, Kim Jong Il’s approach is to establish unrisky business in a restricted area on a private level. It may be a test case for cautious opening up of the country. At the same time, he is trying to heighten tension with South Korea by making military provocations. The reasons are:
- Disparity of opinion between economists and military.
- North Korean regime can survive only in tensions. To maintain itself in extreme economic difficulties, higher tension may be necessary.
- The North may want to make it clear to the South that it is not yet prepared to contact South on an official level. At present, cooperation is limited on a private level.
- The North may want to test the flexibility and sincerity of the South in its new gesture of reconciliation. Before South Korean peace gestures disappear quickly as a result of military provocation.
- To obtain leverage in its dealings with South Korea, USA and Japan.
So far, the South Korean government has shown patience in coping with North Korean provocation. It has not backed downed from its declared policy of reconciliation or accommodation. After the first infiltration of the North Korean submarine, President Kim made it clear that North Korea may continue this kind of acts but he will not change his policy. Much more patience may be needed on the part of South Korea until the South and North find a common ground. Apart from provocation inside the peninsula, there is another problem of different dimension made by North Korea.
That is the launching of missile/satellite over Japanese territory and construction of underground facilities, which is suspected of being nuclear facilities. In an almost absolute isolation and deteriorating economic situation, North Korean leaders may want to own a weapon of mass destruction and means of delivery to solidify its security. Besides, the North Korean government is taking maximum propaganda effect from their launch of missile/satellite for their leader. Maybe by making trouble with big countries, they want to project their leader as a world class figure. Also the North can use it as a leverage in its negotiation with the USA and Japan. Often in the past, North Korea made a bargaining card before entering into talks with other countries. With this card, the North may want to obtain more aid. The western world knows, of course, nuclear weapons or missiles do not guarantee national security. Nor threatening others will not solve economic difficulties. False propaganda of its leader will not free the North from international isolation.
This problem has two faces. On one side, it is a Korean problem, but on the other it is an international problem. To convince North Korea that taking the cooperative attitude is the best way will take time and patience. In every turn of the situation, the North may make trouble to achieve its goal. Every time, South Korea, USA and Japan will have to cooperate and at the four party talks, Chinese cooperation will also be sought.
3. National security
President Kim made it clear that combined defense with allies will be important in his policy. Although Korea encountered economic crisis, it had not cut defense budget except suspension of the purchase of weapons of extremely high technology. In view of President Kim’s policy toward the North, deterrence of war is important. Combined defense serves this purpose better. Presence of U.S. troops in Korea has been working as a deterrent of war for a long time. This situation will continue in the foreseeable future. And the importance of the alliance between South Korea and USA will be increased as policy cooperation between the two countries become vital in maintaining peace in North East Asia as North Korea behaves arbitrarily with the decrease of influence from Russian and China.
4. Foreign Policy
a. If we take a look at the diplomacy of President Kim, we find that his diplomacy is based on rationalism. In his summit meeting with leaders of the USA, Japan and China, and in his response to North Korean provocation, he is excluding emotion. Rather his diplomacy seems to be based on a certain vision and calculation. Also the Korean people are refraining from emotional responses after the economic crisis.
b. As a result of the economic trouble, South Korean government put more emphasis on economic diplomacy. With economic turmoil, Koreans, who have been caught in cold war mentality, started to understand the new world where economy and culture are becoming important.
c. Diplomacy for national security still holds top priority in South Korea and it will continue to be so. Again, present government shows tendency toward internationalism in that it emphasizes combined defense with allies and advocates a security forum in Northeast Asia. In view of this, the government is paying attention to the long-term security measure in Northeast Asia. Even if Korea is unified, it will be a medium power in an arena of big powers. Koreans know well that they will suffer if the situation in Northeast Asia deteriorates and tension heightens.
d. Creation of atmosphere conducive to the maintenance of peace and the achievement of unification is not less important to Korea. Though four powers surrounding Korea are important, good relations with the rest of the world is indispensable.
e. South Korean government has made it clear that it will respect universal values such as democracy, elimination of absolute poverty, human rights, clean environment and peaceful world free from crimes. Although economic turmoil has temporarily slowed the zeal of Koreans to become an active member of the international community, soon they will take their share of responsibility.
f. Diplomacy supported by national consensus is the theme of the new government. Also policy toward the North will be explained to the public to win their support.
IV. Into the 21st Century
With the end of cold war, the world is heading for globalization whether we like it or not. Rapid development in transportation and communication is driving the world into one living zone where change takes place faster and faster. Trillion US dollars move over the borders in a single day. In this fast changing world, making predictions will be meaningless.
Certainly the economic crisis that hit Korea in 1997 will bring about a fundamental and tremendous change to every field of life. The economic crisis may also be a result of the profound change that is taking place already. The launch of a new government at the start of the economic crisis prescribes a reform that will leave its impact for a long time to come.
- The first change in Korean society will be increase of uncertainty in the daily life of an individual. Thus far, people felt safe in their jobs, guaranteed lifetime employment, if one devoted oneself to the company. The society was proud of its full employment. For the past 30 years, unemployment decreased continuously until it reached below 3%. As a result of the 1998 labor reform, guaranteed lifetime employment ended. Unemployment is increasing as many companies closed, downsized and merged. Unemployment rate reached 7.5% by the end of September 1998 and is expected to go up as chaebols swap and downsizing of government takes place in 1999.
Unemployment will decrease when the economy recovers, but state of full employment will not return to Korea. At least 5% unemployment will be maintained to keep flexibility in the labor market. Following the introduction of labor leasing system, many people will have temporary or part-time jobs instead of full time employment. As downsizing and M&A’s are becoming a daily matter, people have to move from one job to another relentlessly.
One of the biggest tasks facing government will be how to comfort the people and keep stability and dynamism. Some degree of social welfare should be introduced at the expense of competitiveness.
- Education fever will change its shape. So far, many Koreans went abroad to advance countries for higher education and to receive Ph, D.’s, often at famous universities. With the economic crisis, people learned; highly educated people have more difficulty finding employment. Thus, vocational schools producing skilled technicians are gaining more popularity. Slowly the structure of educational institutions will change as youths choose more pragmatic education.
- Labor movement has been active for the past 10 years. However, labor movement was bridled by new labor laws under the pressure of public opinion. The two movements of labor and student that had strong social influence are fading into history.
- It is true that Korea has been a society where social groups have priority over individuals. Also nationalism has played a strong role. Through the harsh climate of economic turmoil, it seems individualism is gaining more ground. The Company to which one belongs used to be as important one’s life. Now, with the end of the concept of lifetime employment, the bond between the company and the employee diminished. Contrary to the general concept that national property must be owned and managed by Koreans, international investment and foreign companies are welcomed. Government and business are trying to bring in more foreign companies, and domestic market that once was so carefully protected is now wide open to foreigners. Everyday people hear and read about globalization and policy adjustment to the changing environment. Nationalism will no longer be the strongest ideology, though it will remain as a strong potential energy and bond binding Koreans together as an ethnic group. Little by little, Korean society will become similar to those of the western countries in view of the traits of the Korean people who are receptive to the changes. In this process of change, Korea may be faster than most other Asian countries.
- With the change of international environment and domestic society, individual value and way of thinking will change too. But the dreams of the Korean people will live on in the 21st century, which is to build a unified Korea and live a happy life in peace. Koreans are peaceful people. For a short period of time they competed with China in Manchuria, but that is a part of Korean history. Since then Korea has never started war with other nations. They lived peacefully in the peninsula, but once invaded, they resisted fiercely. I remember one historian’s comment about Korea, that it is miraculous that Korea in its geographical location survived as an independent nation, keeping its identity.
Economies have ups and downs with the lapse of time. Sooner or later the Korean economy will recover. In the long run, the economy will be less of a problem.
Korean society has come to a time of dramatic changes. Changes in this time of reform will be most profound in that these changes will be oriented toward total opening of society. It requests change in the way of thinking as well as life-style. Koreans who have survived all the unfortunate events such as foreign occupation, hot war and cold war are not afraid of change and they will adjust well to the new circumstances.
The most serious challenge still facing Korea is its division of territory. Basically it should be a problem of the Korean people themselves. But the situation will not be so simple. If globalization spreads to all the nations surrounding Korea, it will make better atmosphere for Koreans. But that is not certain yet. Unless North Korea opens its society in the near future, they will have a big problem adjusting themselves to the changed world. Quite often, Koreans think of unification as an economic or financial problem. But the real difficult part may be social problems. That is why the South Korean government is trying to persuade North Korea to change its system with the help of the USA and other friendly nations.
In the long run, it will be the determination of the Koreans that decide the future of Korea. Even if Korea becomes an individualistic society, when the time comes, their nationalistic zeal will return to solve their problems. At least Koreans have the energy, which produced an unprecedented rapid development. Some say that a unified Korea will become a threat to the neighboring countries. Nothing is farther from the truth. Take a look at Korean history. History answers that. Never will Korea be so stupid as to threaten its bigger neighboring countries. Unified Korea will become the most peace orient nation in Northeast Asia, as that is the best interest to itself. Warm cooperation by the neighboring countries and big powers for the reconciliation of the two Koreas and achievement of unification will create an even stronger environment for peace and cooperation in that part of the world.
About the Author: Mr. Sung was appointed as Consul General of the Republic of Korea in Honolulu in October 1997. He majored in Political Science and graduated from Seoul National University in 1966. From 1966 to 1968, Mr. Sung served in the Korean Army as a Lieutenant before joining the Ministry of Foreign Affairs of the Republic of Korea in 1970. From 1971 to 1976, he served as Vice Consul, Consulate General of the Republic of Korea in San Francisco. He has also served as First Secretary, Embassy of the Republic of Korea in Uganda (1978-1980); First Secretary, Embassy of the Republic of Korea in Japan (1980-1984); Director, East Africa Division, Ministry of Foreign Affairs (1982-1984); Consul, Consulate General of the Republic of Korea in Cairo, Egypt (1984-1986); Counselor, Embassy of the Republic of Korea in Oslo, Norway (1986-1989); Minister, Embassy of the Republic of Korea in Pakistan (1989-1991). He graduated from Strategic Course, Defence College in 1992 and became Ambassador of the Republic of Korea to Nepal in 1993 serving in that position until 1996. He was then assigned as Advisory Ambassador to the Taegu City for International Affairs. From 1996 to 1997 he served as Director General, Cultural Corporation Bureau Ministry of Foreign Affairs of the Republic of Korea.