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Korea’s Social Conflicts Driven by Inefficient Resource Distribution, Huge Social Costs
Social Conflicts
Korea’s Social Conflicts Driven by Inefficient Resource Distribution, Huge Social Costs
  • By matthew
  • April 11, 2014, 08:42
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Thousands of protesters hold candles to show solidarity against the importation of U.S. beef in May 2008.
Thousands of protesters hold candles to show solidarity against the importation of U.S. beef in May 2008.

 

Each weekend in the plaza in front of the Seoul City Hall a rally is staged by left-wingers who demand the resignation of President Park Geun-hye and National Intelligence Service Chief Nam Jae-joon, along with the release of Unified Progressive Party lawmaker Lee Seok-ki under suspicion of rebellion. At the same time, on the other side of the police line, another group of demonstrators stand under banners reading “Eradicate the pro-North leftist force.”

This shows how deep the ideological rift is in Korean society. The cracks are not limited to ideological ones, but have long been present in various forms between labor and management, rich and poor, young and old, ethnic Korean and multicultural families, etc. Sociologists point out that the simultaneous conflicts are blocking the efficient distribution of economic resources, and incur social costs of approximately 25 trillion won (US$24.2 billion) a year, which is equivalent to 17 percent of Korea’s nominal GDP for 2013. They also say that the Park Geun-hye government will have hard time getting to its per capita GDP goal of US$40,000 unless it deals with these conflicts in an effective way.

According to the OECD, Korea recorded a social conflict index of 0.72 in 2010, the second-highest among the 28 countries surveyed. The top dishonor went to Turkey, which has gone through hundreds of years of religious conflicts to post an index of 1.27 in that year.

Another problem of the Korean society is distrust. In the 1990s, Korea ranked 11th, with a below-average point of 0.3, out of the 19 OECD member countries where Social Trust Index surveys were carried out. Both the point and the ranking remained as they had in the 2000s, although the OECD average rose slightly to 0.36. More recently, the Korea Institute of Public Administration (KIPA) reported two years ago that the wealth divide was the most severe type of social conflict in Korea, followed by labor-management disputes, regional conflicts, and ideological differences.

Two of the most fundamental reasons for the intensification as of late are the spread of democracy and the slowdown of economic growth. Rapid economic growth used to override social conflicts before the 2000s, but discontent began to be voiced from various social classes with the speed of economic growth falling. In addition, the development of democracy has allowed the people to assert their rights more aggressively.

The feud between the haves and have nots can be attributed, above all, to the former’s lack of transparency during the course of wealth accumulation. “More and more Koreans do not think they can be rich no matter how much they work,” said Eun Jae-ho, head of KIPA’s Social Integration Research Office.

In the meantime, labor-management disputes can be ascribed to poor social safety nets. “At present, the maximum unemployment compensation is 40,000 won per day, and this amount is petty when compared to a basic salary,” Yang Jae-jin, director of the Institute of Public Affairs of Yonsei University, explained. He continued, “Besides, the grant is temporary, so employers and employees have ever-intensifying conflicts over many labor issues such as restructuring.”

According to the Samsung Economic Research Institute, the national economic losses derived from such disputes amount to 246 trillion won (US$237.6 billion) a year, which is equal to 17 percent of the nominal GDP for last year as stated above. This implies that the Korean government can boost the country’s GDP by 17 percent if it succeeds in addressing the conflicts.

Experts also ask for well-designed policy for a perfect balance between growth and distribution. “The social conflicts can be alleviated only when the government adopts the approach regarding distribution as another form of investment,” Dr. Lim Hee-jeong at the Hyundai Research Institute commented. Korea’s ratio of public social spending to GDP stood at 7.6 percent in 2010, ranking 33rd on the list of 34 nations, while OECD member countries recorded an average of 19.2 percent. The government would be well advised to focus more on the distribution of wealth so that it can better address the widespread social discontent and climb at least some notches on the list.