Why apartment prices have gone up in Seoul more than 50 percent During President Moon Jae-in’s term in office, there will be a key policy issue that will be posed to candidates in the 2022 presidential election. Some will argue that the rules were incorrectly calibrated, while others will promise to roll them back if they are elected to the Blue House.
However, the political discourse on the housing market revolves around the root cause of this phenomenon: economic insecurity. Koreans invest in real estate more of their home assets (75 percent) than their foreign counterparts, because they see them safe investment vehicle for retirement… This behavior is due to the fact that about 40 percent of citizens over 65 years old live in relative povertyearning less than half of the average household income.
Meanwhile, families are competing for the right to live in Seoul because parents believe placing their children in better-known school districts will hedge against the ongoing erosion of secure jobs. The proportion of unemployed or part-time Koreans aged 15-29 was 27.2 percent in January 2021 – a record level.
Thus, taming the housing market through new financial rules or concessions will not lead to the roots of such anxiety-driven market behavior. A more productive policy response is to dismantle structures that perpetuate occupational insecurity.
The problem of economic insecurity in old age can be solved by increasing state pensions and / or increasing the earnings of household members throughout their lives. From a purely fiscal point of view, the latter is the smarter answer. And the main culprit preventing most traditional households from reaching their full earning potential is easy to identify: gender inequality…
Due to the fact that many working women leave the workforce when they start families, the country suffers from the largest gap in total income between the sexes of any member of the Organization for Economic Co-operation and Development. As you might expect, this pernicious trend only intensified during the COVID-19 pandemic, when women were suffering from disproportionately high proportion of job losses…
In this context, reversing the loss of women’s ability to earn can reduce economic anxiety at the household level and help stabilize the property market.
Community involvement is needed to stop the headwind. Corporations in South Korea can move to implement a blind application process and actively require that new fathers take parental leave… At the family level, men could (still) take over more household chores…
Here the state plays an important signaling role. In 2020, the National Assembly adopted amendment the requirement that there be at least one woman on the boards of directors of large corporations. Later that year, the Ministry of Education announced that national universities should increase the proportion of female professors to 25 percent by 2030. Given South Korea’s current position in 108 out of 153 countries in the ranking World Economic Forum 2020 Global Gender Gap Index, these quotas should be expanded and increased.
The reaction to any such policy proposal is terribly predictable, given the current political environmentwhere gratification of male chauvinism appears to be a viable platform. (This is honestly global phenomenon.) But the long-term dividends from increased labor force participation and income in the economy are enormous. According to International Monetary FundSouth Korea could see real GDP growth of 7 percent by 2035 if it increased female labor force participation to match the country’s male population. As noted by Troy Stangarone of KEI, these achievements roughly equivalent to what South Korea spends annually on health care.
But there is a second obstacle to achieving gender equality in the labor market: you cannot create well-paid jobs where there are none.
Any harm done to South Korean conglomerates will be condemned in the domestic media as biting the hand that feeds. These global brands contribute greatly to the country’s economic growth, and some, for example, SK and Samsung, have indeed made strides in promoting gender equality in their offices. However, their growing control over the domestic market is exacerbating the employment crisis.
Korean conglomerates today control an increasing share of the sectors in which they participate: following the merger during the 1997-98 Asian financial crisis, Hyundai and Kia together control more than 80 percent of South Korea’s domestic auto industry… After purchase The Hanwha Group, a subsidiary of Samsung’s chemical company in 2014, today produces almost half of all PVC in the country along with other key synthetic products. And last year, Korean Airlines announced planning a purchase controlling stake in Asiana Airlines.
These mergers and acquisitions make sense in the context of exporters’ aspirations to achieve a scale that will make it easier for them to remain competitive in the global market. But as more and more monopsony actors In the domestic labor market, these giants can now maximize profits by paying workers less than the value they create. This helps explain why companies increasingly rely on subcontractors, who are paid less than 60 percent of the wages of full-time workers and who do not enjoy any legal protection. Today, more than a third of the country’s workers are contract workers.
Antitrust measures are needed to restore a more competitive labor market. And with the right corporate and social practices, it will create an environment in which both women and young workers can find higher-reward opportunities.
These challenges require politically complex solutions, but avoiding them is tantamount to wanting to solve the problem. And what the South Koreans are struggling with today should not be so foreign. American other international observers; Seoul’s political and political responses will be instructive for everyone.