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The Asian side of the world

Jean-François Sabouret

Part two. National challenges and their strategies to overcome them

South Korea: social and interdependent economy and socio-economic development

Eric Bidet

Texte intégral

1April 2008

2It is tradition to group economic organisations such as cooperatives, private health insurance and associations together under the term “social economy”. These organisations have certain fundamental principles that distinguish them from capitalist or public companies, and in particular, a democratic mode of governance (a man, a voice) in addition to a determinedly restricted or banned distribution of their profit. While the sector, defined in this way, represents an important area of the economy in most European countries, involving sectors as varied as agriculture, banking, insurance or people-oriented services, its absence, to a certain extent, in the South Korean socio-economic landscape does not go unnoticed: an absence, resulting from a strong political influence (anti-Communism which was exploited by dictatorial regimes to establish their legitimacy and remove any form of public disagreement for a long time) and cultural environment (neo-Confucianism rejecting the principle of egalitarianism, advocating a strict respect of a traditional hierarchy and discouraging individual expression and spontaneous participation). The example of South Korea shows that a good understanding of economic facts and organisations often conduct a deeper study on how to maintain a balance of society, in a way in which the roles allocated to the state, market, family structures and civil society, in a given type of society and culture, are combined. The social economy can somehow be considered as the formal aspect of this civil society, turning itself towards the economic production.

3The socio-economic development model adopted by South Korea with some success for about thirty years (1965-1997) has enabled this country, which was among the poorest countries in the world at the end of the 1950s, to join the OECD in 1996 and be part of the world’s economic powers today. During this development, the family, market and State, which took up most of the space, were favoured over the social and interdependent economy. Such a context gave rise to what one would call a “pseudo social economy” meaning organisations that appear to be social economic organisations (same names, legal status and formal operating rules) without having their essential characteristics. This false social economy has wavered between structures organised and controlled by public authorities for a long time, catering to public policy objectives (agricultural cooperatives, nonghyeop, and certain “associative” movements such as Saemaeul Undong whose main objective was to control the rural electorate majority for a long time until the 1970s) and certain organisations set up by the capitalist sector to escape certain fiscal measures concerning income tax or the transfer of inheritance (this is the case for many foundations created by the Korean chaebols).

4The South Korean socio-economic development model was long built on a type of society marked by almost full employment, strong inter-generational family solidarity drawing its resources from the Confucian culture, single-income household model and a poor participation of women in the socio-economic aspects of their lives. Today’s society, except for the major changes, the South Korean population will see a decline in 2020 and the number of people more than 60 years old will triple in 2050. This aging, considered as the most rapid in the world in the coming decades, questions the inter-generational traditional solidarity. Moreover, since the crisis in 1997, the persisting high unemployment rate among young people, the rise of inequalities and increasing polarisation of society has been threatening social cohesion. More generally, the South Korean model is challenged under the combined economic, social and political pressures that present an endogenous (continued rise in unemployment, new demographic trends, emancipation of women, increased democratic demand, rise in individualism and liberalism) and an exogenous trait (entry into world trade, opening and liberalisation of markets, avatars of inter-Korean dialogue, rise in the power of China and other Asian neighbours).

5Some of these trends have begun to outline a favourable context in which an increasing role of social economy would cater for the emergence of new needs, as was observed in most European countries. Certain health cooperatives have been created based on the Japanese model; an increasing number of associative structures are being set up regarding the care of the elderly or child care; a work integration scheme for the disadvantaged was set up based on the social enterprise concept. Furthermore, the rising influence of environment movements introduces new constraints, but which inspires an increasing number of public projects such as, the rehabilitation of the Chonggyechon river or the Seonyudo island in Seoul or even the creation of a new network of cycle paths; the well-being boom has given visibility to the cooperatives of biological products that had invested in this sector some twenty years ago, while remaining very confidential. In the field of socio-economic policies, a readjustment between economic development and social protection or, in other words, between growth and distribution, is being witnessed. In this respect, the country has indisputably undergone, via Japan, the influence of European models of the social-democratic type, where equity and social justice are central concepts. South Korea consequently chose a very different direction from that advocated by the liberal model and finds itself with a more extensive social welfare system than in the United States and most Asian countries. This is a genuine paradigm change that modifies the social practices and balance between family, state, market and civil society. With the explosion of the “citizen movements” (simin undong) after democratisation in the late 1980s, the number of associations has doubled during the last ten years and 21% of adults over 20 years old were reported to have participated in voluntary work in 2005. The civil society has become an important player in political debate and various governments over the last fifteen years have tried to position themselves in relation to this new force of influence, as illustrated by their political slogans, “Civilian Government” (Kim Young-san, 1993-1997), “People’s Government” (Kim Dae-jung, 1998-2002), “Participatory Government” (Roh Moo-hyun, 2003-2007).

6All these civil initiatives, however, are not alike and are mainly part of an ideological opposition between those emphasising finding a social-democratic way (to which the most influential citizen movements subscribe) and those advocating joining a more pragmatic modernity of liberal inspiration (with some Protestant churches advocating this vision, bringing together close to 20% of the population, according to the National Census in 2005). Besides, the long interventionist tradition inherited from Confucianism, struggles to understand that support from public authorities, which is often required for the sustainability of several initiatives of the social and interdependent economy, is not accompanied by strict control by public authorities. The social economy can, however, generally develop its traditional virtues of flexibility, mobilising solidarity and generosity only if the State gives it the space it needs for the initiative by supporting it. Regarding social welfare, the progress made towards a model with a European influence that could be described as “welfare” is almost continually obstructed by the notion of “workfare”, which is increasingly influenced by a neo-liberal logic insisting on controls and barriers, and which limits the efficiency and extent of structures. The direction and content of the social welfare system are changing according to the pressures between those convinced of the necessity to develop social structures with a social-democratic influence and those defending the idea that the efficiency of public spending must be restricted and strictly controlled at any cost.

7While there is little doubt that the former model–the one, which brought success to South Korea’s economy–is now no longer in use, the characteristics of the socio-economic future still remain very uncertain. Certain European experiences in the areas of minimum wage, social insurance, training the unemployed or the inclusion of the poor, have undoubtedly influenced South’s Korea socio-economic development over the last ten years, but after a decade of a centre-left government, the South Koreans have just elected a president who has not shown much interest in social issues and has focused most of his promises on economic success through his “Korea 747 Vision’s programme” (7% annual growth rate, 40,000 US dollars of gross domestic product per capita and being ranked as 7th in the world’s economy). For the years to come, this new political leadership may mark a setback for civil society, the social arrangements and initiatives within the field of social economy as well as in another area, the inter-Korean dialogue.

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