Korea urged to tackle polarization following Brexit

The following is the first of a three-part series on the implications for South Korea of Britain’s decision to leave the European Union. — ED.

By Yoon Ja-young

What do the polls for Britain’s exit from the European Union and Korea’s April 13 general election have in common?

It’s the shocking result — Brexit and the Korean ruling party’s humiliating defeat showcased that politicians and pollsters alike underestimated the underlying public resentment against the established order, according to analysts.

Britain’s decision to break away from the EU shows that there were many people who were unhappy with the single European market.

Opening up the market and a freer flow of labor pulled up economic growth numbers, but not many feel that they were better off for that in terms of wealth.

How about Korea? The export-driven country is one of the biggest beneficiaries of increasing global trade, but conflict has been intensifying within.

The polarization in Korean society is deepening between the haves and have-nots, between regular and temporary workers, and between small and big companies.

The conflict could explode here anytime, as the number of people in Korea who feel they are not getting a fair deal keeps growing, analysts say.

Kim Tae-joon, an economics professor at Dongduk Women’s University in Seoul, pointed out that economic polarization is a universal phenomenon of globalization.

“Korea is not an exception. The privileged 10 percent and the underprivileged 90 percent are found everywhere. There is growing discontent over economic polarization.”

He cited the death of a maintenance worker at Guui Station in May. The 19-year-old who worked for a contractor of the subway operator was killed when a train arrived while he was repairing screen doors at the station. Many citizens posted remarks of condolences and laid flowers at the site.

“Many of them had empathy with the young man who was an irregular worker. I have the feeling that the emotion of those people may explode one day if our society doesn’t solve these problems,” Prof. Kim said.

Globalization benefited Korea’s conglomerates but it damaged labor intensive small- and medium-sized enterprises (SMEs).

There are a few lucky people who work for the well paying conglomerates and the rest who work for small businesses. According to the labor ministry, those working for conglomerates are paid double the wages of their peers at SMEs.

There is also the division of regular and irregular workers. At conglomerates, irregular workers are paid only 65 percent of the wage of regular workers. The country’s workers don’t belong in the same class. Globalization also enables companies to relocate factories abroad instead of raising wages for domestic workers.

The free flow of capital provides those who have assets with enormous opportunities to snowball these.

Hong Min-ki, a research fellow at Korea Labor Institute, said globalization exacerbated inequalities especially in the United Kingdom, the United States and Korea unlike in the continental countries of Europe.

“It is due to differences in social systems. In many continental countries, the wage agreement is made industry-wise. The agreement signed between the industry labor union representative and the employers applies to all workers. There is internal control that prevents excessive wage inequality,” he explained.

Pointing out that unsatisfied workers in the United Kingdom and the United States are turning their anger toward immigrants, he said that Korea is also harboring the seeds of anti-immigration. They say that migrant workers are putting pressure on wages, keeping them from rising, on top of taking their jobs. “That is reflected in both the U.K.’s Brexit and the Donald Trump syndrome in the United States. In both cases, many people agree with the idea that foreign workers are taking jobs.”

According to the researcher, they are not totally groundless. There are studies that show that migrant workers substitute for domestic workers.

“It means they cause conflict. Immigrant workers substitute for domestic workers in low-income jobs, pressuring wages downward,” he said. “Anti-immigrant sentiment is likely to increase among low-income workers in Korea as well.”

Prof. Kim said that the Brexit should be taken as an opportunity for Korea to start serious discussions so it can tackle the problems in advance.

“Those who thought they were economically damaged voted for Brexit. It will be difficult to get rid of polarization in Korea. Decreasing the privilege of the wealthy and shifting it to the public will be possible only when there is a social consensus made or in times of crisis.”

With some reading Brexit as a crisis sign for neoliberalism, analysts say that this philosophy needs a correction. In the article, “Neoliberalism: oversold?” economists at the International Monetary Fund (IMF) said the costs of neoliberalism in terms of increased inequality are prominent.

“Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects,” they noted.

Welfare State Society, a local NGO, pointed out that the United Kingdom’s low social welfare compared with other European countries, coupled with deregulation, tax cuts, privatization and labor market reform worsened economic polarization there.

“During the past 30 years dominated by neoliberalism, the income of the mid-to-low class hardly increased while that of the top 1 percent continued surging. The most fundamental problem is that the government hasn’t played its role amid increasing inequality,” it said in a statement.

“The top 10 percent take 45 percent of total income in Korea, which is the highest in Asia according to the IMF. How about the haves in Korea? Do they have the will to solve inequality?”