Korean 'well-being' slogan for some, not others
By David Scofield

SEOUL - Is South Korea set to exit the economic doldrums? That's the optimistic slant some domestic analysts are putting on data released recently by South Korea's National Statistical Office, showing consumer sentiment on the up in September. With a score over 100 indicating more people than not planning to increase spending on goods and services over the coming month, September scored 88.9, the first move up in five months. Hardly time to uncork the champagne for sure, but is this the beginning of a recovery?

Stable growth, the obvious precursor to President Roh Moo-hyun's oft-stated goal of US$20,000 per capita income level - non-adjusted per capita income has hovered around $10,000 for much of the last decade - hinges not only on strong export growth to China (the 45% increase in exports to China in 2003 helped keep Korea on track and out of recession), but the willingness of South Koreans to open their wallets again and spend, something most are reluctant, or unable, to do.

Indeed, given the almost $400 billion in household debt hanging over the economy, a return to the heydays of consumerism in South Korea may be wishful thinking. But while extravagant consumption by those least able to repay may not return, there is a class of people in South Korea with tremendous wealth at their disposal - funds that need to be circulated throughout the economy if a recovery is to take hold.

Capital flight has been a concern for South Korean governments, perhaps most acutely decades ago when the movement of capital out of the country could have derailed Korea's meteoric rise in global economic stature. Previous administrations imposed tight regulations on the movement of capital out of the country. The family-owned corporate behemoths were legislated through import/export credits to reinvest in the nation.

But Korea's latest economic setbacks have been a product, not just of funds flowing out of the nation, but of dwindling savings rates, an unstable job market and a flawed policy by the central government that encouraged unsustainable debt spending. The results are today's tremendous debt hangover and an average savings rate only half the 8-10% rate many foreign analysts believe is necessary to prompt strong domestic spending. Those Koreans not deeply in hock are concerned about their job prospects as the country's corporate stalwarts are being increasingly driven to the more reasonable (read: cheap) wages of China, right next door.

Of course, Korea is still a wealthy country. Its gross household debt levels, while alarming, pale in comparison to those found in the United Kingdom of the United States. The richest, those whose investments have driven the high growth rates that Koreans have enjoyed for many years, have to be lead back into the domestic market. The question is how. Looser controls on capital, a product of Korea's 1998 International Monetary Fund bailout, have made it hard to impossible for the Roh administration to stem the hemorrhage of badly needed investment capital. It's also made it very difficult to precisely determine just how much is flowing out.

The National Statistical Office indicates that $13.6 billion was moved out of Korea in the first eight months of the year, much, ostensibly, through emigration and for overseas education. But that is hardly the complete picture. It doesn't capture the monies that have flowed into international commodities and gold over the last few months, nor does it reflect the corporate funds flowing to more stable, profitable climes - not just from the nation's giants, but now from thousands of small- and medium-sized enterprises (SMEs) whose own debts are pushing them to look beyond Korea for cheaper labor and increased profits. SMEs are estimated to hold between $190-200 billion in loans due to mature this year.

There is little the government can do through legislation alone. To attempt to plug the holes will be counterproductive as investors view unfettered profit repatriation as a minimum prerequisite to investment. The key to reversing the tide is not through crackdowns or new cumbersome regulations, but by creation of a domestic environment that Koreans want to invest in.

It seems like Roh's government has accepted this point, at least in theory, evidenced in Roh's new "well-being" mantra. Well-being, a phrase brimming with marketing value, is everywhere in Korea these days. Restaurants, pharmacies, health clubs - virtually every service available in the country is prefacing the service on offer with "well-being". But while the term resonates with some people, exactly how all this wellness is to be achieved is less apparent.

The well-being slogan seems to be interpreted differently depending on age and social situation. For Korea's well-heeled elite, the accumulation of greater profits seems to be the focus of well-being. Their acquisition of commodities, gold and offshore real estate may be the path to their personal well-being, but it's not what Roh had in mind when he first began using the term a couple of months ago.

For the younger generation, well-being, at least for some, seems to be increasingly hinged on emigration - well-being through escape. According to a Canadian embassy official who attended a two-day immigration fair in Seoul in October, the profile of prospective Korean immigrants is changing fast. During the fair last year, the vast majority of those seeking information on moving to Canada were in their 30s and 40s, many citing their children's education as the primary reason behind their wish to emigrate. This year, almost 70% of the 19,000 Koreans who visited the fair were in their 20s or 30s. No longer citing education as the primary motivator for moving, many said they wanted to go to Canada for a more comfortable lifestyle: well-being, at least for many of Korea's young and well-educated, is best found outside Korea.

It's the same story one hears from an employee at the global headquarters of Korea's second largest conglomerate, LG Group, in Seoul. Far from being afraid of hard work, the 20-something with a foreign master's degree in business administration decried the inefficiencies of the system he and his peers must work under. "The top bosses are concerned only with maximizing their power," he fumed, "while the rest live in fear of being made redundant," a fear that increases exponentially as the workers' age increases. The system prompts fearful middle-managers to push the young talent beneath to perform superhuman feats, all in the hope of impressing those above them and keeping their jobs for another year.

The system isn't new, the long hours expected of Korea's corporate workers are the stuff of legend, but unlike the past when the company reciprocated with job guarantees, no such guarantees exist today and the fear has never been so pronounced. Overtime is rarely logged. Those who've worked within the Korean corporate world know of another long tradition, that of assigning work at the end of the day - a strategy designed to ensure all workers are still at their desks long after the official workday is over. This is designed not to increase worker output per se but to ensure an office of diligent workers bound to their desks when the top executives leave for the day. Given the realities of life within Korea's largest firms, slogans of "well-being" thus only serve to demonstrate to many of Korea's younger professionals just how far removed they are from Roh's new lifestyle ideal.

But this may also be a pointer to the fact that Roh's claims of the pursuit of well-being will propel the nation forward are right on the mark. A happier, less fearful workforce with time for family and weekends - and spending the income in the process - could be just the growth engine the domestic economy needs. A vibrant domestic economy ensures expansion, which in turn will attract the funds that are presently drifting abroad. But "well-being" will have to become more than just another feel-good slogan and address the issues of discontent that plague the domestic economy.

David Scofield, former lecturer at the Graduate Institute of Peace Studies, Kyung Hee University, is currently conducting post-graduate research at the School of East Asian Studies, University of Sheffield, United Kingdom.

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