ECONOMIC CRISIS OF 1997 IN SOUTH KOREA
At the end off 1997, South Korea companies were unable to pay off their loans, the stock market crashed and the Korean currency lost half of its value. The South Korean government had go begging to the International Monetary Fund for a $58 billion loan---the biggest IMF rescue package ever---but even that wasn't enough. Japan, the United States and other countries coughed up more money to prevent the South Korean economy from totally collapsing.
Unemployment rose from 2 or 3 percent to 8.7 percent. At end of December 1997, the stock market had declined by 49 percent and the currency had depreciated by 65.9 percent. A black market for dollars opened in Myongdong in Seoul. Growth in 1998 was -7.8 percent.
The 1997-1998 Asian financial crisis was a blow to South Korea's pride. The crisis took hold just months the country reached the $10,000 per capita income level for the first. The collapse of the won (the South Korean currency) quickly reduced it to $6,600 and the world's 11th largest economy was suddenly the 17th largest economy behind Russia, Mexico, India and the Netherlands.
Problems began in July, 1997 when Thailand devalued its currency and markets fell all over Asia. Investors began taking a hard look at South Korea and they were not happy with what they saw: namely inefficient companies with massive debt burdens. They began taking their money out of South Korea and tightening credit. By October, foreign reserve were dwindling dangerously low. Without a supply of credit, Korean companies found themselves unable to pay back their loans and faced defaulting. The entire South Korean economy came close to collapsing.
The crisis in South Korea was rooted in its chaebols (large industrial conglomerates) which had their fingers in many pies, often spent money wastefully and had accrued massive debts. South Korea's financial problems began in earnest with the collapse of Hanbo Steel, an arm of Hanbo, the country's 14th largest chaebol. The company had borrowed $6 billion to build a huge modern steel plant on a capital base of $343 million. By 1997, Hanbo's debt was 22 times more than its net worth. The Hanbo Group had 23 subsidiaries, 22,000 employees and annual sales of $8 billion. In early December 1997, the Halla Group, South Korea's 12th largest chaebol, went bankrupt, with debts that were 30 times its equity.
Also in early December 1997, the Korean government revealed it was $160 billion in debt (the figure would expanded to $450 billion, 1.5 times South Korea's GNP, a month later). In a meeting in mid-December, the Clinton administration decided that if South Korea wasn't saved the collapse of its economy could set off a dangerous chain reaction that might have repercussions all around the globe, so it put in motion a rescue plan.
South Korean Economic Miracle
In the first three decades after the Park Chung Hee government launched the First Five-Year Economic Development Plan in 1962, the South Korean economy grew enormously and the economic structure was radically transformed. In 1962 the per capita gross domestic product (GDP) was US$87. It grew to US$1,709 in 1983 and US$4,830 in 1989. By 1996 it reached US$10,543. In 2003, it was US$15,090. South Korea's real gross GDP expanded by an average of more than 8 percent per year, from US$2.3 billion in 1962 to US$204 billion in 1989. The manufacturing sector grew from 14.3 percent of GDP in 1962 to 30.3 percent in 1987. Commodity trade volume rose from US$480 million in 1962 to a projected US$127.9 billion in 1990. The ratio of domestic savings to GNP grew from 3.3 percent in 1962 to 35.8 percent in 1989. [Source: Andrea Matles Savada and William Shaw, Library of Congress, 1990 *]
South Korea adopted a policy of economic modernization, emphasizing export-oriented industrialization and growth. Growth rates exceeded the goals of the five-year economic plans. South Korea's high GDP growth rate during the 1960s and 1970s was accompanied by growth in the labor supply and a rising share of national product going into capital formation — from 15 percent in the early 1960s to more than 30 percent in the late 1970s.
According to the “Worldmark Encyclopedia of Nations”: South Korean “has a market economy in which both private enterprise and foreign investors play an important role. From 1962 to 1997, overall economic development was guided by the Economic Planning Board and a series of five-year plans. The Korean economy was devastated by the Korean War, even requiring foreign food aid. As late as 1965, per capita income was only $88 a year. Since 1965, South Korea has been transformed from an underdeveloped agricultural economy to a leading newly industrialized country (NIC) to a leader in the new information technology (IT) economy. Nominal GDP was $3 billion in 1965; in 2003, it was projected at $514 billion, 171 times higher. In 2004, South Korea joined the trillion-dollar club of world economies. [Source: Worldmark Encyclopedia of Nations, Thomson Gale, 2007]
According to “Governments of the World”: “The story of South Korea's economic rise from desperate poverty to relative prosperity has been the subject of extensive press coverage and analysis as well as intense scholarly debate. Although no consensus exists, this much is clear: South Korea's economic rise began in the 1960s after the military coup. From 1945 to 1961, South Korea was one of the poorest countries on earth. Income equality, as measured by the United Nation's Gini Index, is relatively high in South Korea, at 0.31 (which is better than all Asian countries except Japan and substantially better than that of the United States). According to the United Nations Development Program, moreover, South Korea's level of "human development" is considered high and is comparable to the most economically prosperous countries in world. [Source: “Governments of the World: A Global Guide to Citizens’ Rights and Responsibilities”, Thomson Gale, 2006]
Dark Side of the Economic Miracle
According to “Governments of the World”: ““South Korea's economic development came at a very high price, however. Between 1961 and 1987, in particular, labor movements and strikes were often met with brutal violence. Not surprisingly, working conditions were generally extraordinarily oppressive. Indeed, South Korea has long had one of the worst records for industrial safety in the world. In 1986, nearly 3 percent of Korea's entire industrial workforce suffered injuries requiring at least a four-day hospital stay, and 1,660 workers were killed in industrial accidents.” [Source: “Governments of the World: A Global Guide to Citizens’ Rights and Responsibilities”, Thomson Gale, 2006]
“In addition, South Korean workers routinely worked the longest hours among workers in all industrializing and industrialized countries, and wages were kept artificially low to increase South Korea's industrial competitiveness. The focus on rapid industrialization also reflected the government's equally strong obsession with national security. This combination created fertile ground for human rights abuses and political repression, both of which were serious problems in South Korea prior to 1987.
“At the same time, South Korean firms (most of which were family-owned) had access to heavily subsidized loans through government-controlled banks and were protected from international competition in the domestic market. A few favored firms were also protected from domestic competition, which encouraged them to diversify into a wide range of products and services. This enabled many firms, called chaebol, to grow with blinding speed and develop immense economic and social power. By the 1990s, some of these firms had developed into major international players, including Hyundai, Samsung, LG (originally known as Lucky-Goldstar), and Daewoo. The extreme concentration of economic power has long been considered a danger to the country's political, social, and even its economic development.”
South Korean Economy in the 1970s
South Korea’s outward-looking strategy for rapid industrialization in the 1960s was particularly well suited to that time because of South Korea's poor natural resource endowment, low savings rate, and tiny domestic market. The strategy promoted economic growth through labor-intensive manufactured exports, in which South Korea could develop a competitive advantage. Government initiatives played an important role in this process. The inflow of foreign capital was greatly encouraged to supplement the shortage of domestic savings. These efforts enabled South Korea to achieve rapid growth in exports and subsequent increases in income. [Source: Andrea Matles Savada and William Shaw, Library of Congress, 1990 *]
By emphasizing the industrial sector, Seoul's export-oriented development strategy left the rural sector relatively underdeveloped. Increasing income disparity between the industrial and agricultural sectors became a serious problem by the 1970s and remained a problem, despite government efforts to raise farm income and improve living standards in rural areas.*
By the early 1970s, however, the industrial sector had begun to face problems of its own. Up to that time, the industrial structure had been based on low value-added and labor-intensive products, which faced increasing competition and protectionism from other developing countries. The government responded to this problem in the mid-1970s by emphasising the development of heavy and chemical industries and by promoting investment in high value-added, capital-intensive industries.*
The structural transition to high value-added, capitalintensive industries was difficult. Moreover, it occurred at the end of the 1970s, a time when the industrial world was experiencing a prolonged recession following the second oil price shock of the decade and protectionism was resulting in a reduction of South Korean exports. By 1980 the South Korean economy had entered a period of temporary decline: negative growth was recorded for the first time since 1962, inflation had soared, and the balance-of-payments position had deteriorated significantly. *
Economic Liberalizations of the South Korean Economy in the 1980s
Economic problems beginning in 1980s coincided with political liberalizations that permitted labor strikes which in turn resulted in major wage increases. In the early 1980s, Seoul instituted wide-ranging structural reforms. In order to control inflation, a conservative monetary policy and tight fiscal measures were adopted. Growth of the money supply was reduced from the 30 percent level of the 1970s to 15 percent. Seoul even froze its budget for a short while. Government intervention in the economy was greatly reduced and policies on imports and foreign investment were liberalized to promote competition. To reduce the imbalance between rural and urban sectors, Seoul expanded investments in public projects, such as roads and communications facilities, while further promoting farm mechanization. [Source: Andrea Matles Savada and William Shaw, Library of Congress, 1990 *]
These measures, coupled with significant improvements in the world economy, helped the South Korean economy regain its lost momentum in the late 1980s. South Korea achieved an average of 9.2 percent real growth between 1982 and 1987 and 12.5 percent between 1986 and 1988. The double digit inflation of the 1970s was brought under control. Wholesale price inflation averaged 2.1 percent per year from 1980 through 1988; consumer prices increased by an average of 4.7 percent annually. Seoul achieved its first significant surplus in its balance of payments in 1986 and recorded a US$7.7 billion and a US$11.4 billion surplus in 1987 and 1988 respectively. This development permitted South Korea to begin reducing its level of foreign debt. The trade surplus for 1989, however, was only US$4.6 billion dollars, and a small negative balance was projected for 1990.*
In the late 1980s, the domestic market became an increasing source of economic growth. Domestic demand for automobiles and other indigenously manufactured goods soared because South Korean consumers, whose savings had been buoyed by double-digit wage increases each year since 1987 and whose average wages in 1990 were about 50 percent above what they had been at the end of 1986, had the wherewithal to purchase luxury items for the first time. The result was a gradual reorientation of the economy from a heavy reliance on exports toward greater emphasis on meeting the needs of the country's nearly 43 million people. The shifts in demand and supply indicated that economic restructuring was underway, that is, domestic consumption was rising as net foreign demand was falling. On the supply side, the greater growth in services mirrored what the people wanted--more goods, especially imports, and many more services.* Japan profited from selling high-level components and machinery to South Korea.
South Korea recorded a favorable balance of trade for the first time in 1986; there was an even more favorable balance in 1987. Funds generated from this trade surplus allowed South Korea to reduce its total foreign debt to US$35.6 billion by 1987.
Real growth was 12.5 percent between 1986 and 1988,and 6.5 percent in 1989. According to the “Encyclopedia of World Cultures”: “ South Korea became the world's tenth-largest steel producer by 1989 and began exporting automobiles, ships, electronic goods, textiles, shoes, clothing, and leather products. Because of South Korea's emphasis on industrialization, the relative importance of the agricultural sector has steadily declined. By January 1989, agriculture, fishing, and forestry employed approximately 13 percent of the total industrial work force and generated 10.2 percent of gross domestic product. At the same time, farmers increased their income (by 24.4 percent in 1988) by raising cash crops, thus increasingly becoming commercial farmers. [Source: Choong Soon Kim, “Encyclopedia of World Cultures Volume 5: East / Southeast Asia:” edited by Paul Hockings, 1993]
South Korean Economy in the 1990s
The rapid economic growth of the late 1980s, however, slowed considerably in 1989. The growth rate was cut almost in half from the previous year (to a still-robust approximate 6.5 percent), the inflation rate increased as wages soared even higher, and there was speculation concerning a small trade deficit in the early 1990s. These developments all pointed to a gradual slowing of the expansion of the rapidly maturing economy. Nevertheless, it also was clear that rapidly rising domestic demand would keep the economy healthy (even with a slight drop-off of exports), unless a major political crisis were to shock the country. [Source: Andrea Matles Savada and William Shaw, Library of Congress, 1990 *]
By 1990 there was evidence that the high growth rates of the late 1980s would slow during the early 1990s. In 1989 real growth was only 6.5 percent. One reason for this development was the economic restructuring that began in the late 1980s — including the slower growth of major export industries that were no longer competitive on the world market (for example, footwear) and the expansion of those industries that were competitive, such as electronics.*
In the late 1980s, South Korean economic planners expected growth to continue at somewhat reduced rates through 2000, a result of slower growth in inputs. The rapid growth of exports had enabled the country to specialize in the products it made best and to import those it produced less efficiently. Domestic producers had to rely more on the domestic market for growth than in the past. Protection of domestic producers prompted less productivity.
According to the “Worldmark Encyclopedia of Nations: “The seventh five-year economic and social development plan for 1992–96 aimed at establishing the ROK as an advanced industrialized economy by the year 2000. More specific goals included improving social and economic equity, continued liberalization, improving industrial and export competitiveness, as well as strengthening the role of the private sector while reducing government intervention in economic management, especially in the financial sector. The plan targeted an annual GDP growth rate of 7 percent and a decline of consumer price inflation to 3 percent. The plan was overtaken by the Asian financial crisis. [Source: Worldmark Encyclopedia of Nations, Thomson Gale, 2007]
Trouble Begins Brewing in South Korean Economy in the 1990s
Rapid increases in short-term debt precipitated by overinvestments by chaebols and insufficient foreign exchange reserves caused the financial crisis of 1997. [Source: Chunghee Sarah Soh, “Countries and Their Cultures”, The Gale Group Inc., 2001]
The government borrowed heavily in the 1960s and 1970s to finance economic development. By the mid-1980s, South Korea was one of the world's major debtors. After 1986 there was a drastic change in domestic savings, with savings growing to 36 percent in 1987 as compared to 33 percent in 1986. The twin factors of increasing debt and low domestic savings that had threatened growth in the past had been mitigated to a considerable degree but still was an issue.
Donald N. Clark wrote in “Culture and Customs of Korea”: “The economic slump that hit the South in 1997-98 was a reminder that the economy there is not as rich or stable as many had come to assume. The concentration of wealth in the hands of the business elites and the unhealthy flows of money between industrialists and government officials ("crony capitalism") created imbalances and led to risky economic decisions that sent the South Korean economy into a tailspin within a few short weeks in 1997. At the heart of the crisis was a spate of unwise borrowing from foreign sources that Korean banks suddenly discovered they could not repay on time. So many debts came due so suddenly that it took a massive rescue effort by the international financial community led by the International Monetary Fund (IMF) to make the payments. [Source: “Culture and Customs of Korea” by Donald N. Clark, Greenwood Press, 2000]
Chaebols and Causes of Economic Crisis of 1997 in South Korea
The immediate main cause of the crisis was a shortage of foreign reserves, which had been sucked up by government-backed low interest-loans given to risky investments and expansion programs by the chaebols. Knowing that the government would bail them out, the chaebols seemed more intent on taking over the world than making profits. They produced millions of products with establishing market share as their primary objective.
Chaebol waste was closely tied to corruption and cronyism between the chaebols and the South Korean government. In addition, concessions to labor created higher wages and made it more difficult to lay off workers. Companies were vastly overstaffed.
The chaebols invested heavily in wasteful projects. They sunk billions into semiconductors and auto manufacturing and even things like aircraft making and movies. Samsung and Ssangyong started mult-billion auto industries in a market that was already flooded. Samsung invested $6 billion in a plant capable of producing 60,000 luxury cars a year "because the chairman likes fast cars." The chairman of Ssnagyang was a "car maniac" who once owned 20 cars including a Jaguar, Lotus, Lamborghini, BMW and Mercedes.
Much of South Korea's debt was owed by the chaebols. The chaebols maintained debt burdens three times that of businesses in the West. Their debt to equity ratio was an astonishing 400 to 1,000 percent. They started costly businesses at the drop of a hat and were so heavily in debt they tied down much of the country's money.
In 1997, seven chaebols announced they were insolvent. Among the other major chaebols that went bankrupt in 1997, in addition to the Hano and Hall Groups, were Sammi Steel ($2 billion in debt) and Kia Motors. Jinro Distillery, the nations 19th largest company nearly went bankrupt. Even though Kia was bankrupt it still produced 40,000 cars a month and talked about becoming a "top-10 global automaker in the 21st century." Its plant was capable of producing 650,000 cars a year, with 90 percent of the work done by robots. Daewoo acquired Ssangyong's car plant without paying a penny. It simply assumed 60 percent of Ssnagyang's debt.
The bankruptcies also hurt thousands of subcontractors that did businesses with the bankrupt companies. Unable to get credit and payment they too had to declare bankruptcy. In 1998, 1,000 companies went bankrupt a month.
Impacts of the Economic Crisis of 1997 in South Korea
During the Asian financial crisis in South Korea, shoppers stormed supermarkets and hoarded foreign products; workers shaved their heads to protests lay-offs. Newspapers had few pages. Television stations broadcast at shorter hours. Stores replaced imported products with domestic ones. In an efforts to raise foreign currency, companies encouraged workers to turn in loose dollars or yen they might have lying around the house. Executives accepted 20 percent pay cuts. a clothing manufacturer forced to lay off a third of its work force told Newsweek, "Before, companies that had done business with us for a decade would help us out in times of trouble. But no more."
Security guards were brought in to restore order outside banks that we in danger of collapsing. Analysts said the country was "just 10 days away" from "a major financial catastrophe." One economist told Newsweek, "A year ago foreign banks were so eager to lend us money. Now some of them don't even answer our phone calls...Asking the IMF for help is like filing for national receivership."
Restaurants offered IMF menus; citizens stocked up on bulk supplies of milk and flour; expense accounts were curbed; street lamps were turned off; commuters stopped driving; and teachers encouraged student to use their pencils until they were stubs. Pblic holidays were canceled. Weddings and trips were postponed. Elevators were programmed to stop at every other floor to save energy. Hospitals---which imported 90 percent of their supplies---delayed nonemergency surgeries.
Koreans complained that there was too much foreign meddling in Korean affairs. Problems were blamed on the IMF and foreign investors. As part of the xenophobia backlash, foreign shows were canceled; protesters at the airport harassed Koreans leaving for foreign vacations, schoolgirls burned foreign products; and smokers refused to buy foreign cigarettes, Financial analysts said some of these moves were self destructive because no one would want to lend them money.
Ordinary South Korean were encouraged to turn in their wedding rings and jewelry so they so be melting down to boost gold reserves. One bank manager said, "there's a Korean saying that by gathering dust you can create a mountain." The gold drive collected 15 tons of gold and raised $2 billion. Korean-Americans sent hundreds of millions of dollars to South Korea. Even so it barely made a dent in the money that South Korea owed. There were rumors that Japan would extend $10 billion in emergency funds in return for disputed Tokdo islands.
Kim Dae Jung, Economic Reforms and the Economic Crisis in 1997-98
After soliciting the advice of international financiers like George Soros, before he even officially took office as president, the newly-elected Kim Dae Jung floated the won, liberalized the bond market, raised the cap on interest rates to 40 percent, negotiated with union to make sacrifices and made enough reforms to encourage bankers to reschedule their loans,
Kim Dae Jung was able to convince unions, companies and government to cooperate to get the economy going again. He passed laws that required South Korea companies to be audited and required to them to obtain loans publically rather than secretly. He made it easier for foreign inventors to enter South Korea by getting rid of laws that limited foreign investment and allowing foreigners to take over whole companies if they wanted.
In return for the $58 billion loan package the IMF insisted that South Korea get its house in order and this meant passing new fiscal and monetary policies, deregulation, economic transparency, bank reforms, major liberalizations in trade and capital inflows. It also meant allowing interest rates to rise, encouraging foreign investment and improving the structure and governance of Korean corporations.
Kim Dae Jung more or less followed the complicated plan that the IMF worked out. The government recapitalized banks, set up a public asset-management company to get rid of bad loans. Kim walked a fine line with the chaebols as he restructured and reformed them without letting them fail. He also lifted foreign investment limits in banking, real estate and stocks. Most foreign exchange controls were lifted in the early 2000s.
The South Korean government set up a $1.2 billion investments fund for small- and medium-size companies. The top five chaebols were banned from borrowing from the fund. Plans to privatize the railway and power industries were slowed by strikes.
Chaebol Reforms
After the Economic Crisis of 1997-98, the chaebols went through profound changes, many of them mandated by the government. They slimmed down, sold off divisions and concentrated on their core businesses. They were broken into pieces and each unit had to stand on its own. Sudbisdaries that couldn't make the grade on their own were written off or allowed to fail.
Half the chaebols were allowed to fail, break up, or come under foreign ownership. Companies began operating under the principal of increasing shareholder value. Emperor-like chairmans lost their power. The units that were left were downsized and restructured in part to lure back foreign investors.
Some critics claimed the reforms were superficial and mostly “smoke and mirrors." Later corruption scandals showed a bribe-free system in South Korea was wishful thinking. And although the chaebol families own only an average of 5 percent of their companies they still managed to run them like fiefdoms.
The chaebols ended becoming more powerful than less. In 1998, top five chaebols accounted for 37 percent of gross output and 44 percent of exports as sub-contractors and small business went bankrupt. In 2001, the government bailed out Ssangyong, one of the worst managed chaebols, with debts of $2.5 billion. Investors and reformers saw this as a bad sign. Other losers heped out by the government included Hyundai Engineering, with debts of $3.4 billion, Hyundai Electronics, with debts of $6.2 billion, and Daewoo Motors.
Unemployment and Impact of the Economic Reforms in South Korea
South Korea, like Thailand, followed the IMF advise and rebounded much quicker after the Asian financial crisis than countries like Indonesia that did not follow the advice. The currency was allowed to floats freely, reserves of foreign currency increased, mostly by exporting to the United States, and the practice of borrowing from abroad on the short term was curtailed. Foreign capital began pouring in after the government removed barriers on foreign investment deregulate markets and force companies to disclose more about their financial conditions.
By some estimates over 2 million workers lost their jobs in 1998 and more than 800,000 people were laid off in 1999 and 2000. Unemployment hit 9 percent. Some unemployed men started up new business and took jobs with small companies, where they conditions were often better than at the chaebols. Some returned to the countryside to work as farmers. Others took jobs in faraway towns and moved away from their families. In addition, people were put to work in low- paying public works program and some job training programs were set up. The government scrambled to create a safety net. In the past people were kept on the payroll instead of laid off. That was the welfare system.
Hardships in South Korea the Post-1997-Crisis Economic Reforms
There were increases in alcoholism, divorce and crimes such as burglary and assaults of debtors. Visits to counselors and psychiatrist increased. At one point one businessman a day committed suicide after their business failed and their life savings were lost. There were also reports of increase number of orphans as parents abandoned their children and even parents killing themselves and their children because things were so bad.
Children were pulled out of school. People were unable to heat their homes. Some lost their homes. Shoe repair shops had increases in business as people chose to repair their old shoes rather than by new ones. There was less traffic in the streets as people had no jobs to go to and increases in gas prices encouraged people to take the bus and subway.
People hoarded their hard currency and began being more careful about what they ate, avoiding higher priced imported foods. Swamp meets and flea markets were set up so people could sell heir personal belongings.
Shelters were set up for out of work white collar workers. Some ne were so humiliated they dressed up the morning as they were going to work, left the house, killed time in park or library, and returned home, talking about what a tough day they had. Young people had hard times getting work. One university graduate said that "finding a job is harder than pulling a star out of the sky." There was a lot of labor unrest after the economic crisis in 1997-98.
How the IMF Bailout Failed South Korean Workers
Choe Sang-Hue wrote in the New York Times: “Under a prescription dictated by the International Monetary Fund, South Korea liquidated some of its most prized conglomerates and banks, adding a million to the ranks of the jobless — known then as “I.M.F.,” or “I’M Failure,” people. “We learned lessons from 1998,” said Choi Byung-hoon, vice chairman of the government Economic and Social Development Commission. “When companies shed workers because the economy is bad, they will find themselves short of skilled workers when the economy recovers.” [Source: Choe Sang-Hue, New York Times, April 1, 2009]
“South Korea was the first among Asian economies to come out of the deep recession, but at a heavy cost. The experience undermined one of the strongest assets of the South Korean economy — the communal harmony at work sites — as the country learned the previously unfamiliar concepts of layoffs and a flexible labor market. Income inequality deepened as the use of temporary workers increased.
“Before South Korea was forced to go to the I.M.F. for a $57 billion bailout, management guaranteed lifetime employment. In return, workers put in long hours at low pay and showed absolute loyalty to managers’ decisions. “Buy Korea” was the civic duty, and the company was an employee’s second home. With the Asian financial crisis dismantling that social contract, mistrust disrupted relations between management and labor, often hobbling companies’ productivity in the process. Union leaders sat at the bargaining table wearing red headbands that proclaimed: “We will fight you to the death!”
Fired “For No Reason” Hits Employee's Trust After the Asian Financial Crisis
Many workers were fired 'for no reason' after the 1997-1998 Asian Financial Crisis. John M. Glionna wrote in the Los Angeles Times: With a shudder, Kim Deuk-uy recalls the gloominess of the 1998 Asian financial crisis. Kim worked for a securities company that was shedding employees like a snake sheds skin. Kim could see it: The nation's rocky finances would lead to a change in the dynamic between workers and executives in South Korea. "It became a good excuse to fire the full-time employees for no good reason, hire them back at two-thirds of the payment as a part-time employee, though they were doing exactly the same job," he recalled. "You had to be constantly on watch, thinking whether they are going to fire you or not. The executives' earnings, on the other hand, skyrocketed." [Source: John M. Glionna, Los Angeles Times, August 21, 2011]
“He watched people leave the company in tears, some imploring those still left, "Please save the company." Kim survived 1998, only to be fired from the securities firm seven years later. But the corporate atmosphere changed him and he decided to move into the nonprofit sector. "I joined an NGO called SPEC Watch, where we look out for speculative buying. I serve as the director of policy there. It's a meaningful job for me," he said.
Nowadays, Kim looks at his role in his nation's roller-coaster economy not as a victim, but as a cautious survivor. "After working at the securities company and seeing my colleagues being fired for no reason, I just felt something slowly change inside of me." "I don't think this year's stock market crash is as bad as back then," he said. "I still get nightmares from '98."
Image Sources: Wikimedia Commons.
Text Sources: South Korean government websites, Korea Tourism Organization, Cultural Heritage Administration, Republic of Korea, UNESCO, Wikipedia, Library of Congress, CIA World Factbook, World Bank, Lonely Planet guides, New York Times, Washington Post, Los Angeles Times, National Geographic, Smithsonian magazine, The New Yorker, “Culture and Customs of Korea” by Donald N. Clark, Chunghee Sarah Soh in “Countries and Their Cultures”, “Columbia Encyclopedia”, Korea Times, Korea Herald, The Hankyoreh, JoongAng Daily, Radio Free Asia, Bloomberg, Reuters, Associated Press, BBC, AFP, The Atlantic, The Guardian, Yomiuri Shimbun and various books and other publications.
Updated in July 2021