South Korea - Labor

More about the Economy of South Korea.

Industrial Safety

Of the almost 5 million workers employed in 70,865 South Korean factories in 1986, some 142,000 (nearly 3 percent) were so badly injured that they had to be hospitalized for more than four days. There were 1,660 workers killed in industrial accidents, meaning an average of just over four workers died each day. Long working hours and bad working conditions contributed to high rates of injury and death.

Labor

Despite significant increases in wages in the 1980s, labor unions in the late 1980s continued their wave of strikes demanding better working conditions and wages. The ferocity and sheer size of the labor movement caught management and the government by surprise. During his first year or so in office, President Roh Tae Woo was confronted with considerable labor unrest; there were more than 300 strikes in the first three months of 1989. Emboldened by the political reforms of 1987 and by reports that the rate of South Korea's economic growth was greater than the improvements in their own incomes and life-styles, many workers agitated for a greater share of the nation's prosperity and sought more freedom and responsibility at the workplace and an end to the traditional paternalism of management. Lost production was estimated to have climbed to US$6 billion in 1989 from US$4.4 billion in 1988.

Workers were caught in a revolution of rising expectations, as a wave of rising urban land values and housing costs outpaced average real wage increases of more than 70 percent during the 1980s. Moreover, wages for manual workers, who were responsible for much of the production and export that fueled the economy, were much lower than the national average. In the late 1980s, working families still found themselves struggling to meet minimum standards of living. Employees also were expected to work long and often erratic hours in exchange for steady employment and were frustrated over a lack of benefits and individual say. One labor activist noted in 1989 that the labor movement "is not a class struggle. We just want better working conditions and better status for workers. We have been looked down on in Korea for a very long time."

Worker complaints were focused on three areas: low wages, long working hours, and a high number of industrial accidents. In 1986 the average wage of a South Korean worker was US$381 a month (339,474 won), including overtime and all allowances. The basic wage was US$287, or 255,408 won, but, according to the government, the basic wage necessary to sustain a "decent" way of life was US$588 (524,113 won). Thus, the average worker only earned two-thirds of what the government thought necessary to sustain a family of four. In 1987 semiskilled workers typically received US$1.50 to US$2.00 per hour and worked fifty-five to sixty hours a week; unskilled workers worked twelve-hour days seven days a week, earning US$125 a month.

There were, however, dramatic increases in wages in 1988 and 1989. Labor stoppages in the manufacturing sector, coupled with a scarcity of labor, led to 20-percent salary increases for workers in the manufacturing sector in 1988 and 25-percent salary increases in that sector in 1989. These raises later spread, increasing wages across the entire economy 18.7 percent in 1989. By 1989 some South Korean economists were worrying about the effect that skyrocketing wages would have on the cost of domestic-made goods and the consequent impact on export prices. The situation was was especially worrisome because the wages paid to workers in South Korea's major competitors were growing far more slowly.

South Korea was known for having the world's longest working hours. In 1986 the Korean worker averaged about 54.7 hours a week. This situation was the natural consequence of the low wage system that necessitated extended hours and extra work to earn minimum living expenses.

Wages and Living Conditions

The economic expansion of the 1980s caused rapid improvements in the living conditions of many South Koreans, which does not mean, however, that all lived comfortably. Indeed, one had only to wander the narrow alleys of Seoul, Inch'on, or other South Korean cities to see poor living conditions. In 1990 families in slum areas of Seoul usually had electricity and running water, as well as a small range for cooking, a television, and a radio or two. But living space was crowded, furniture was shabby, and buildings were badly built and gloomy. People in poorer families seemed to be fairly healthy and had adequate diets. The level of starvation, as well as the cost of some foodstuffs, seemed low. Beggars and the homeless who wandered the streets were infrequent. Although there were some noticeable exceptions, farming families generally lived in small houses, with few of the basic luxuries of middle-class urban families.

Living conditions in South Korea's cities, however, were improving in the late 1980s. According to the Economic Planning Board, in April 1988, the average monthly income in Seoul and other major cities was 612,400 won (US$868) a rise of 16.1 percent over the previous year.

A composite portrait of average middle-class families in Seoul would show the following: a husband in his early forties, a wife about six years younger, and two children, aged thirteen and ten. The family would live in a fairly small apartment, consisting of a hallway, one small bedroom with bunk beds for the children, a small room with several bureaus and with mats as floor coverings, a television set and a videocassette recorder, and a hi-fi stereo. This room would serve as an eating area and family room during the day and as the parents' sleeping area at night. There also would be a larger room partitioned off into three sections: a living room with three elaborate easy chairs, a more formal dining area, and a small kitchen with an oven-range, sink, washing machine, shelves, and cabinets. The mother would stay at home; the father would work from 9:00 A.M. to 10:00 P.M. six days a week. There would be a fairly new car, probably a Hyundai, which the father would use to drive to work.

A survey of income distribution in South Korea in 1985 and 1988 showed that average household income had risen on average 14.8 percent per year, from 5,857,000 won (US$8,645 based on the 1989 exchange rate of US$1=677.5 won) to 8,863,000 won (US$13,081). The Gini coefficient, a commonly used measure of income distribution, dropped slightly from 0.3449 in 1985 to 0.3355 in 1988. The comparable figure stood at 0.285 in Japan in 1985 and at 0.364 in the United States in 1978.

As noted by David I. Steinberg, economic growth translated into fairly equitable income distribution when compared with other nations experiencing similar development and its attendant problems. When Park took office, approximately 40 percent of the population lived below the poverty line; by the late 1980s, less than 10 percent of the population lived under the poverty line, although incomes at the top of the scale had increased faster than those at the bottom. Salary increases had not been constant under Park's regime because Park did not want high labor costs to detract from the competitiveness of South Korean goods on the international market. By late 1980s, capital-intensive higher technology was more important. Further, although wages had increased substantially in the late 1980s, this increase was not because of the good will of the chaebol or the government, but was the result of a great many strikes and a shortage of skilled workers as industry expanded and large numbers of workers moved to the Middle East to work on construction projects.

The purchasing power of the average citizen rose rapidly in the 1980s. Real per capita GNP more than doubled between 1983 and 1988 (from US$1,914 to US$4,040) and was expected to reach US$5,100 by 1991. South Korea was already transforming itself into a durable consumer society. By the late 1980s, television sets and refrigerators had become a standard part of the average household, and ownership of an automobile was not unusual. Families tended to consume more meat, fresh vegetables and fruit, canned or processed foods, and to eat less rice than in previous decades. They also dressed in modern fashions made from quality fabrics.

Higher incomes led to significant shifts in consumption patterns. For example, in 1963 the average family spent 57.4 percent of its budget on food. Twenty years later, the share going to food had fallen to 40 percent and was expected to continue to fall (but not as rapidly as in the past). Despite the decreasing share of food in the consumer budget, the absolute value of food consumed grew regularly in the 1970s and 1980s and was expected to continue to do so in the 1990s. Rising incomes, the increased mobility of the average person, and a high literacy rate demonstrated evident socioeconomic progress.

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