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Opinion pieces on business & economic issues

CHOI Sook-Hee

How Koreans Regard Their Economy

CHOI Sook-Hee

June 7, 2006

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Korea's economy has been adjusting to the economic changes following the Asian financial crisis of 1997. It has been significantly restructured in line with the worldwide trend toward a global economy.

One of the changes brought by the globalization trend is the widening income gap between different income groups. Widening income gap also means differences in consumption patterns.

Amid the changing economic and social conditions, it is worth examining how Korean people perceive their economy and society. Let me discuss this issue by referring to my presentation at the 2005 symposium on "Korean General Social Survey."

This survey was conducted jointly by the Samsung Economic Research Institute and Sungkyunkwan University under the sponsorship of the Joongang Daily. It asked more than 1,600 individuals across the nation about their views on Korea's capitalism, the economy, and corporate sector.

The survey showed, by and large, that Korean people's perception of capitalism has greatly changed during 2003 to 2005. First of all, many Koreans feel that corruption and other form of irregularities have declined over the past three years. Instead, they said competition has risen. A 22.9% of respondents said they felt a greater sense of competition ruling the Korean society as opposed to 13.7% who felt this way in 2003. This indicates that Korea is successfully adjusting to the global trend of recognizing competition as a key factor for survival. As a result, lifetime employment is vanishing in Korea , making a way for a greater degree of labor market flexibility. Performance-based compensation and rising unemployment of youth workers form the basis of competition.

Perception of capitalism also shows differences across the age groups. Respondents in their 20s said competition was the first thing that came to their mind when thinking of capitalism. Respondents in their 30s and 40s said material abundance or sufficient condition for improved living standard is the first thing they associate with capitalism. Those in their 50s and 60s replied that capitalism is related to the rich-poor income gap.

People in their 20s associate capitalism with competition apparently because a significant portion of them is either unemployed or hold temporary jobs. They are the victims of growing flexibility in the labor market caused by globalization.

As for the perceptions of capitalism related to the rich-poor gap, this appears to reflect concerns of a rapidly aging society, in which a large number of people in their 50s or 60s have relatively few job opportunities. The fact that some people in their 20s or 50s or 60s have a negative view of capitalism should be worrisome. On the other hand, those in their 30s and 40s have positive image of capitalism, which can be considered as a positive factor.

How do Koreans regard their corporate sector?

Many respondents cited management transparency as their top concern for businesses. Nearly all respondents said transparency was the most important factor influencing their perceptions of the corporate world, surpassing factors such as export performance, employment, tax payment, product quality, social contribution, environment protection, etc.

However, respondents in their 60s cited manufacturing of quality products as the most important factor, followed by export amount. All other age groups selected management transparency as the most critical factor, followed by product quality and hiring. All respondents cited technological prowess as the most crucial factor of corporate success. Those in their 20s and 60s also said that attracting and retaining global talent is another key factor for business success. People in their 30s, 40s, and 50s emphasized CEO's leadership as the next important aspect.

How do respondents look at big business groups' contribution to the national economy?

A majority of 74.2% of respondents recognized large business groups' contribution to economic growth. Those in their 40s consisted 82.1% of the respondents concurring with this view. About 68.7% of all respondents answered that they thought large corporations will continue to render contribution to economic growth in the future. People in their 40s were most optimistic on this point.

In the 2004 survey, a 75.7% of total respondents said large companies were making positive contribution to the economy, and 67.1% replied they expected large companies to continue doing so in the future. As in the 2005 survey, those in their 40s in the 2004 poll appeared the most optimistic on large companies' future contribution to the economy. Based on these two surveys, we can conclude that Korean people are becoming favorably inclined to the role of large corporations in the national economy.

The 2005 survey also asked how Koreans view their future economic growth. A 47% of all respondents said they expected the economy to improve in the future, as opposed to 21.5% who held a pessimistic view. About 26.9% of the respondents said they expected the economy to grow in a similar pace as now. People in their 60s had the greatest confidence in the future of the economy.

What perception changes on the economy have occurred in the past three years by age groups? Those in their 30s shifted from pessimism to optimism about the future of the economy, while those in their 60s consistently remained optimistic. People in their 40s remained the least optimistic during the same period.

To summarize, conditions of the Korean economy are changing fast, and Korean society is adjusting to the idea of competition. Koreans in general give good marks to the contribution of large business groups to the national economy. Across the board, they appear generally optimistic about the future growth. These indicators, as culled from the survey, should contribute to a better understanding of where Korean society is heading in years to come.

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