In the 1960s, Seoul, the capital of South Korea, looked drastically different than it does today. From a heavily underdeveloped country with an uneducated population, South Korea has transformed into an economic powerhouse with better infrastructure than most European countries. However, this transformation has come at a steep price. Today, South Korea struggles with the highest number of suicides in the world, a desperate youth struggling to find jobs, and a population ranked among the unhappiest nations globally.
The Birth of the Korean Economic Miracle
South Korea’s journey towards becoming one of the most developed nations on the planet started in the mid-1950s. The country faced numerous challenges, including Japanese occupation, division between the U.S-backed South and Soviet-backed North, and the devastating Korean War. Despite these obstacles, South Korea experienced rapid economic growth due to three main factors:
1. Government Support for Chaebols
In the early 1960s, the Korean government decided to transform the economy from agricultural to industrial by supporting a select few family-owned companies known as chaebols. These chaebols received immense government support in the form of loans, subsidies, tax breaks, and other resources. In exchange, they aggressively expanded abroad and delivered the economic growth the government desired.
2. Education Fever
The Korean government heavily promoted the idea that a university degree was necessary for success in life. This push resulted in an unprecedented education boom, with South Korea going from a 22% literacy rate in 1945 to being the most educated country in the world. Today, more than two-thirds of young people in South Korea hold university degrees.
3. Culture of Extreme Work Ethic
The culture of incredibly hard work in South Korea was mostly created during the economic boom by the chaebols. They indoctrinated their employees with complete and absolute loyalty to the company, emphasizing that the company came first before family, personal life, or free time. This dedication played a significant role in fueling the economic boom.
The Dark Side of the Miracle: Toxic Factors Damaging Economy and Society
While these factors enabled the Korean Miracle, they have since become toxic and damaging to both the economy and society.
1. Chaebols: Growth Without Hiring
Although chaebols make up about 85% of South Korea’s GDP, they only represent around 10% of jobs in the country. They have become experts at growing without hiring many new employees. This has created a disconnect between the country’s economic growth and the availability of qualified jobs for its educated population.
2. Education Inflation and Unemployment
South Korea’s focus on higher education has led to an oversupply of college graduates. As a result, college-educated individuals now face higher unemployment than those without a college degree. Many young people struggle to find jobs and are forced to look for opportunities abroad.
3. Extreme Work Culture and Low Happiness Levels
The extreme work culture, societal pressure, and challenging economic conditions have made South Koreans among the unhappiest nations globally. The country also has the highest number of suicides per capita in the world for the past two decades.
The Struggle to Change
Although the South Korean government has recognized these issues and is slowly attempting to make changes, progress has been slow. The chaebols hold significant political influence, making it difficult for reforms to take place. South Korea is now stuck with corporations that are too big to fail and too powerful to allow change, a growing youth unemployment rate, and a deeply depressed population.
In conclusion, the rapid transformation of South Korea into an economic powerhouse has come at a great cost to its society. The same factors that once fueled the nation’s growth are now causing significant challenges and contributing to the dark side of the Korean Miracle. The youth faces growing unemployment, while the extreme work culture and societal pressures have resulted in a highly unhappy population with alarmingly high suicide rates.
The Need for Economic and Social Reform
To overcome these challenges, South Korea must implement comprehensive economic and social reforms. These changes could include:
- Diversifying the Economy: Reducing reliance on chaebols and promoting the growth of small and medium-sized enterprises (SMEs) could help create more job opportunities for the educated population and decrease income inequality.
- Rethinking Education: A shift towards vocational training and skills-based education, rather than a purely academic focus, could better align the workforce with the needs of the job market.
- Improving Work-Life Balance: Implementing policies to encourage better work-life balance, such as shorter working hours, flexible work arrangements, and better childcare options, could help alleviate the extreme work culture and improve overall happiness levels.
- Addressing Mental Health: Increasing investment in mental health care services and promoting awareness of mental health issues could help tackle the high suicide rates and improve the well-being of the population.
- Political Reform: Strengthening the transparency and accountability of the political system, as well as reducing the influence of chaebols in politics, could facilitate the implementation of much-needed reforms and create a more equitable society.
Although the road to change may be difficult, it is essential for South Korea to address the dark side of its economic miracle. By doing so, the nation can not only ensure its continued economic growth but also create a more inclusive and happy society for its people.
Reminds me of my time working in Japan – everyone spent long hours in the office because face time was paramount. They weren’t necessarily being productive but no one dared leave before the manager left. But then it was time to have dinner and drinks with your boss after work. Get home by midnight. Be back at the office at 7am and do it over again. It was insane.
We can all agree that the obsession over competition is very common in Asian Countries. The overly competitive process of acquiring a “seat” in a particular college or university is something even Indians have to go through. I can say with no doubt that if a reform has to happen in South Korean governmental policies, their skilled labour can also be put to good use. Which is what is happening in India, albeit slowly and gradually.
This shows us that governments should not only prioritize economic situations, but also the human one (happiness, family, rest, recreation, etc.).
I have a lot of South Korean friends. I also once worked for a South Korean boss. I have always wondered why so many South Koreans migrate to the USA, given South Korea’s economic success. I did not know about the economic crisis it was facing. Thank you, Dom. I prey that one day, South Korea gets back on its feet.
I think this sort of phenomenon is not just limited to South Korea. A lot of other countries are also having a hard time creating a healthy balance between the demand for jobs and the supply of the labour force. Needless to mention, the demand for manual labour has been decreasing quite significantly over the years with the massive improvements in technological innovations; however, the global population is on the rise and the number of educated people have skyrocketed. It was inevitable, and it’s such a bummer especially for the youngsters.
My South Korean born and raised parents moved to the USA in the 1980s, where my siblings and I were born & raised, and now subsequently all have full time jobs that allow us to be financially independent. My mother’s family, who was very wealthy, didn’t understand why she would leave her comfortable situation to begin all over in a foreign country. Watching this video makes me very thankful for her sacrifices and it’s very sobering to imagine what life would be like if I was born and raised in South Korea. My cousin’s family just paid a company thousands of dollars for him to find an internship in the USA, and he doesn’t want to return.
I have been in Korea for the past five years, the country is doing well a lot of excitement, and isn’t like a 500 years of economic dominance history like western countries do, but enthusiastically learning and growing.
There is a lot of new policies that government implemented maximum of 52 hours per week work.
School grading system has got changed and minimum salary is significant increasing.
This isn’t just Korea. Most Asian countries value work over happiness. Which is the least productive thing to do. I’m French and even tho we’re sometimes referred as lazy people, the reality is that France is the sixth most productive country at work in 2022. To me there’s no secret behind that, we’ve tons of paid vacations and national holidays. Workers have lots of rights and we work only 35 hours a week. So when we come back to work on Monday after a relaxed weekend with our friends and family we’re fresh and ready to be efficient at work. I think our Latin neighbours have kind of the same systems.
I’m Korean and have lived in the US for 10 years. The most striking difference I felt was Korea’s obsession with looks over substance.
I’m a Korean American who emigrated in 1970, when SK was poorer than dirt, to find a better life in the US. We came with little more than the clothes on our backs. Nobody expected to see the SK economic miracle, and it has been quite impressive. Suffice it to say, today, living in America and in my early 50s, I work remotely in a semi-retired fashion, have multiple homes, earn a 1% income and I do not have a competitive bone in my body. I kind of half-assed it through college and my working life, yet, I am better off than the vast majority of Koreans (and Americans too, for that matter). My parents, both in their 80s, retired from their dry cleaning business 25 years ago and are also millionaires in their own right. They could easily go back to SK anytime and enjoy the riches of modern day Korea, and before the pandemic, they used to go back once per year. But they know intimately about the many disadvantages of living in South Korea today and choose to stay in America. Yes, America has its flaws too, but, in general, it’s a beautiful, relatively stress-free life. I thank my lucky stars every day that I am here in the States and not over there.
Super interesting article! I have been living in Seoul for almost 3 years, and I agree with everything here. I currently teach 5 year-olds who can all read and write English. They are already feeling pressure from parents to get into the “good schools.” If they don’t, it’s seen as shameful to their wealthy families. Also, we get to leave at 4 30 PM but Korean staff MUST stay until 6 PM. It’s a crazy competitive society with a lot of great things, but also a dark side.
The GDP vs jobs thing and the mismatch in the labor market really helped explain what I had been wondering. Like, South Korea seems to dominate economically in so many sectors – semiconducters, cars, shipbuilding, steel, shipping, construction, machinery, electronics, appliances, entertainment but at the same time I would run into Koreans in the US looking for opportunity (rather than lets say “adventure” that typical expats often say) or hear about how hard it is for graduates to find a job and it just didn’t make sense to me. I think I have also heard that they have less “high respect” jobs in the internal (non-tradable) sector compared to the US at least which also helps explain the imbalance (even though I have also heard about private education and plastic surgery so who knows).
If anyone from South Korea is reading this – is there a push in society now like in the US to get a “skilled trade” job vs. a white collar job? I’m not sure how “tracked” the education system is so that would probably have a big influence, but in the US where there really isn’t any tracking, there is a big push for high school students to get an apprenticeship or go to community college to learn a trade instead of going to college to get a degree in like communications. (Politicians and the media always use gender studies or art history when making this push, but A) – I only know a very small amount of people with these or similar majors, B) – most people I know that have them actually are doing well or went to graduate school, C) – I would imagine based on my limited knowledge that these types of majors are even less common than in the US).
This isn’t isolated to Korea, Japan has been in this trap forever. And now China is also stepping in albeit a totally different ideology and political-economical system. Part of that is due the pathway they had gone thru to either break away from extreme poverty, or in Japan’s situation, a literal fallout after the war: they all centered “hard work” to the point it gets extremely toxic, the culture is heavy on peer pressure and looking down blue collar jobs, combining with gender disparities. Too add salt to the wound, capitals managed to find their ways infiltrate/brainwash people to turn them essentially into hardworking machines. Thru the decades, a very complex but distorted system of social classes were formed and is very hard to trickle down, very few people find happiness in it yet couldn’t get out.
I am Korean and an important thing to consider is, the why. I think it’s more correct to say, Koreans are not satisfied still, even though we’ve accomplished a lot and are in competition with our neighbors, specifically Japan and China. We are taught, and I do agree with this, to be highly competitive or else the whole country will suffer.
The Dark Side is really called “Monopoly” due to corruptions. Most startups don’t make money during its first x number of years because these companies are focused on market share rather than price of their shares. As companies are matured, companies can find ways to more effectively control their cost which isn’t always a bad thing but it is when there is a huge monopoly in the country. For example, an specific industry only needs 100 employees in total could have total of more than 150 employees in the sector due to competition because the financial firms backing different startups are putting down money thinking they can be the next big thing. However if there is only 1 player in the game then it’s likely it’s going to be less than 100 employees in the only startup around. Market needs competition in order for money to do its part in chasing more money such a way that more people are employed and more resources are used in chasing the same end result. While this is not the most cost effective way as a country but it’s most effective way keeping most people happy.