The End of Developmental Citizenship?:
Economic Restructuring and Social Displacement
in Post-Crisis South Korea
Chang Kyung-Sup, Ph.D
Professor of Sociology
Seoul National University
changks@snu.ac.kr
Contents of the Paper
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1. Introduction
2. Developmental Citizenship vs. Social Citizenship
3. Financial Crisis Resolved through Proletarian Crisis
4. Bipolarization and On-the-Job Poverty
5. Arrival of Jobless Industrial Capitalism
6. Transition to Social Citizenship?
7. Exiting Jobless Industrial Capitalism
8. What Alternative? A Middle Way Politics?
-------------------* Please do not quote (except the summary of the paper). Materials
prepared for conference presentation only. Many tables and figures
prepared for visual presentation here, while their sources are duly identified,
have been directly extracted from the original publications and web print
pages.
Presentation Summary
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1) A decade after what South Koreans call “the IMF crisis”
has transformed the South Korean economy and society in
an irreversible direction. Although they have seemingly
resuscitated their economy in a way as impressive as their
earlier industrial buildup, most South Koreans express
increasing fatigue and hopelessness about their
socioeconomic status.
Presentation Summary
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2) During the pre-crisis three decades, grassroots South
Koreans had been enfranchised by the successive
developmentalist governments in what I propose to call
developmental citizenship. Then the South Korean
developmental state managed to industrialize and expand
the national economy at a pace that could incorporate
almost all economically motivated individuals through
increasing jobs and better incomes – but not through
comprehensive social security benefits that, in European
welfare states, constitute “social citizenship” in T. H.
Marshall’s explanation. South Koreans responded to this
dynamic economic process by fully mobilizing private
material and human resources as economic investment.
Presentation Summary
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3) The economic crisis of 1997 and its emergency rescue
measures – in large part recommended by the IMF – dealt a
fatal blow to this state-grassroots interactive
developmentalism. As clearly shown in formal statistics,
labor shedding was the most crucial measure for rescuing
South Korean firms a big part of which were on the verge of
bankruptcy. Even after the breathtaking moments were over,
most of major firms continued to undertake organizational
and technological restructuring in an employment-minimizing
manner, and thereby got reborn as globally competitive
leading exporters.
Presentation Summary
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4) The sustained economic growth buttressed by
phenomenal increases of export by a handful of major
chaebol firms has not been accompanied by meaningful
improvements in grassroots employment and livelihood.
Instead, temporary and underpaid jobs have become normal,
and on-the-job poverty has increased sharply. Income
inequality has kept expanding continuously, and even those
under absolute poverty lines have drastically increased in
numbers and proportions.
Presentation Summary
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5) Such social polarization may now worry major South
Korean firms far less than before because they are not as
much dependent upon domestic labor supplies as before
and potentially because their ownership, if not their
management, has been internationalized at appalling
speeds. Foreign corporate shareholders would not wish for
more when South Korea’s economic growth is accounted for
mostly by rapidly rising corporate income (as opposed to
stagnant labor income).
Presentation Summary
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6) The two relatively less conservative (not progressive!)
governments under Kim Dae-Jung and Roh Moo-Hyun
respectively did try to come to grassroots South Koreans’
rescue by providing various elements of the “social safety
net”. However, even after increasing social expenditure
many years, South Korea’s public budget for social security,
not to mention its social services, is nowhere near those of
serious social policy states in the West. Income transfers
through public welfare programs seem to have only marginal
effects on reducing inequality and poverty.
Presentation Summary
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7) Too many South Koreans appear both helpless and
demoted as shown by various actions of exiting or wishing
to exit the jobless industrial capitalist system: exit from the
(flexible) labor market (i.e., frenzied pursuit of jobs in civil
service and public corporations); exit from the economy
altogether (i.e., massive youth withdrawal from job search,
often called “disappointment unemployment” or
silmangsileop); exit and indirect exit from the country (i.e.,
sustained outmigration and sending children abroad in
massive numbers); exit from the family (i.e., delaying
marriage, divorcing, reducing fertility, deserting or separating
from family, all at disconcerting rates); and even exit from
existence (i.e., committing suicide at internationally
headline-making rates).
Presentation Summary
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8) More disheartening than these social and economic
miseries is South Korean politics. A presidential election
approaching just several months away, all these economic
troubles and social dilemmas of grassroots South Koreans
apparently fail to constitute a serious political agenda. This
inefficacious governance system (in which almost every
politician proclaims to be “centrist” for the sake of
ideological safety) is quite likely to accelerate desperate
individual actions of exiting for many years to come.
2-1. employed people and unemployment rate, 1963-1997 (NSO,
1988, Fifth Years’ Economic and Social Change Seen through Statistics, p.97)
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_________________________________________________________
total number of
unemployment
employed persons (1,000)
rate (%)
_________________________________________________________
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1963
1970
1980
1990
1997
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7563
9617
13683
18085
21048
8.1
4.4
5.2
2.4
2.6
2-2. sectoral composition of employment, 1963-1997 (NSO, 1988,
Fifth Years’ Economic and Social Change Seen through Statistics, p.99)
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_________________________________________________________
agriculture/
manufacturing/
services
fishery
mining
_________________________________________________________
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1963
1970
1980
1990
1997
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_________________________________________________________
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63.0
50.4
34.0
17.9
11.0
8.7
14.3
22.5
27.6
21.4
28.3
35.3
43.5
54.4
67.6
2-3. average monthly wage of regular employees by industry,
1970-1997 (1000 won) (NSO, 1988, Fifth Years’ Economic and Social
Change Seen through Statistics, p.105)
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entire
manufacturing construction finance, real
nonfarm
estate, etc.
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1970
1980
1990
1997
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___________________________________________________________
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17.8
176.1
642.3
1463.3
14.3
146.7
590.8
1326.2
24.2
257.7
745.4
1623.6
37.9
281.6
852.3
1646.3
2-4. government expenditure in social welfare, etc., 1957-1997
(NSO, 1988, Fifth Years’ Economic and Social Change Seen through Statistics,
p.125)
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total
health,
defense
expenditure in
social
%
100 million won
security %
___________________________________________________________
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1960
1970
1980
1990
1996
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420
4413
76820
332961
838410
5.2
4.0
6.7
9.8
10.2
35.0
23.2
30.6
20.0
15.0
2-5. household expenditure in education, 1963-1997 (NSO, 1988,
Fifth Years’ Economic and Social Change Seen through Statistics, p.224)
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_____________________________________________________________
urban
rural
-------------------- -------------------annual
% of
annual
% of
educational total
educational
total
expenses
living
expenses
living
in won
expenses
in won
expenses
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1963
1970
1980
1990
1997
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_____________________________________________________________
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4200
22320
125676
664704
1903380
5.6
7.2
5.8
8.1
10.6
2650
14185
200283
862435
1753798
3.4
6.8
9.4
10.5
10.3
2-6. savings and investment rate, 1953-1997 (NSO, 1988, Fifth
Years’ Economic and Social Change Seen through Statistics, p.121)
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savings rate
l
-------------------domestic total
total
private portion
investment rate
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1953
1960
1970
1980
1990
1997
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13.1
9.0
18.1
23.2
35.9
34.6
11.1
5.0
12.1
18.1
27.4
24.3
14.7
10.0
24.3
31.9
37.1
35.3
3-1. corporate performance per worker during crisis (The Bank of
Korea, 1998, "The Analysis of Corporate Management in the First Half of 1998“,
unpublished survey report)
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Analysis of Corporate Management Performance in the First
Halves of 1997-1998 (n=2,328)
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Performance item
1997
1998
__________________________________________________________
Total sales increase rate
9.1
5.0
Sales profit ratio
7.5
8.8
Total profit ratio
1.4
-0.4
Per worker sales increase rate
13.9
20.0
Per worker value-added increase rate
11.4
9.3
Per worker expense increase rate
8.3
-4.7
Worker expenses to sales ratio
12.0
9.4
Finance costs to sales ratio
6.2
9.3
Total debt ratio (year-end for 1995-97) 396.3 387.0
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3-2. post-crisis unemployment rate (NSO, 2006, Social Indicators in
Korea 2006, p.237)
3-3. employment by work status,1985-2006 (NSO, 2006, Social
Indicators in Korea 2006, p.244)
3-4. gap between regular and non-regular workers, 2003 (Yoon
Jin Ho, 2005, p.120)
4-1. average monthly income of urban worker households
2006,Social Indicators in Korea 2006, p.216)
(NSO,
4-2. household income by richest 20% vs. poorest 20%
(www.yonhapnews.co.kr (Yonhapnews),15 May 2007, based upon data from the
National Statistical Office)
4-3. GINI index before and after crisis
p.67)
(Lee Hyun-Ju, et al., 2006,
4-4. poverty rate before and after crisis
p.61)
(Lee Hyun-Ju, et al., 2006,
4-5. proportion of on-the-job poverty before and after crisis
(Lee Hyun-Ju, et al., 2006, p.132)
5-1. jobless economic growth (10,000 new jobs per 1% growth)
(www.president.go.kr (Blue House Briefing), 29 March 2006)
5-2. jobless export growth (new jobs per billion won export)
(www.joins.com (JoongAng Daily), 20 December 2006)
5-3. % labor income vs. % capital income, 1980-2004 (The Bank
of Korea, Jan 2005)
5-4. individual vs. corporate disposable income growth
Ho, 2005, p.115)
(Yoon Jin
5-5. foreigner shareholding in major South Korea companies
(2006 end) (www.heraldbiz.com (Herald Business), 23 April 2007)
6-1. social expenditure vs. GDP in 2004 in international
comparison (www.khan.co.kr (Kyunghyang Daily), 4 March 2007, based upon
data from OECD)
6-2. relative poverty rate(% less than 50% of the median
income) before and after public transfers (Ku Inhoe, 2006, p.113)
6-3. GINI indices of market vs. disposable income (Ku Inhoe, 2006,
p.109)
7-1. workplaces preferred by youth aged 15-24 (2006) – exit
from the market (www.chosun.com (Chosun Ilbo), 5 December 2006)
7-2. economically inactive youth aged 15-24 – exit from the
economy (www.donga.com (Dong-A Ilbo), 4 March 2007, based upon data
from the National Statistical Office)
7-3. heads of dispersed families, 2006 – exit from the country
(NSO, 2006, Social Indicators in Korea 2006, p.206)
7-4. age at first marriage be sex, 1990-2005 – exit from the
family (NSO, 2006, Social Indicators in Korea 2006, p.191)
7-5. crude marriage and divorce rates,1990-2005 – exit from
the family (NSO, 2006, Social Indicators in Korea 2006, p.182)
7-6. total fertility rate, 1985-2005 – exit from the family
2006, Social Indicators in Korea 2006, p.150)
(NSO,
7-7. elderly living alone or with spouse only,1995-2005 – exit
from the family (NSO, 2006, Social Indicators in Korea 2006, p.200)
7-8. suicide rate of OECD countries (per 100,000) – exit from
existence (www.donga.com (Dong-A Ilbo), 19 September 2006)
Thank You
3-2. post-crisis unemployment rate (NSO, 2006, Social Indicators in
Korea 2006, p.237) – to be used later
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_________________________________________________________________________________________
total / farm nonfarm / men women / up to
high
college / youth
middle school or more
aged
school
15-29
_________________________________________________________________________________________
1997
2.6
0.7
2.9
2.8
2.3
2.2
3.3
3.0
5.7
1998
7.0
1.8
7.7
7.8
5.7
7.9
8.3
5.9
12.2
1999
6.3
1.7
7.0
7.2
5.1
6.9
7.6
5.4
10.9
2000
4.4
1.3
4.8
5.0
3.6
4.6
5.1
4.2
8.1
2001
2002
2003
2004
2005
4.0
3.3
3.6
3.7
3.7
1.2
1.0
0.9
1.1
1.0
4.3
3.6
3.9
3.9
4.0
4.5
3.7
3.8
3.9
4.0
3.3
2.8
3.3
3.4
3.4
4.0
3.0
3.0
3.3
3.3
4.6
3.7
4.3
4.5
4.6
4.0
3.7
3.6
3.5
3.4
7.9
7.0
8.0
8.3
8.0
2006
3.5
1.2
3.7
3.8
2.9
2.4
4.1
3.4
7.9
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3-3-1. employment by work status,1990-2006 (NSO, 2006, Social
Indicators in Korea 2006, p.244) – to be used later
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_____________________________________________________________
total wage
% employees
workers in
-------------------------1000 persons
regular
temporary
daily
_____________________________________________________________
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1990
1995
2000
2005
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_____________________________________________________________
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10950
12899
13360
15185
54.2
58.1
47.9
52.1
29.0
27.9
34.5
33.3
16.8
14.0
17.6
14.6