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| Despite a series of government measures, youth unemployment remains exceptionally high in South Korea. A growing number of young Koreans feel more and more hopeless as they struggle to find jobs. / Korea Times photo by Ryu Hyo-jin |
Economic growth fails to deliver true happiness for Koreans
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| James Rooney |
The Korea Times interviewed five global economists to figure out why they feel miserable and come up with ideas on how to improve the degree of their happiness. They are Andy Xie, an independent economist based in Shanghai; James Rooney, a professor of international finance at Sogang University; Katrina Ell, an economist at Moody's Analytics based in Sydney; Antonio Fatas, a professor of economics at INSEAD's Singapore Campus; and Alicia Garcia-Herrero, AP chief economist at Natixis based in Hong Kong. The following discussion has been reconstituted based on separate interviews conducted through emails and phone calls from March 26 to 30 ― ED.
By Kim Jae-kyoung
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| Andy Xie |
James Rooney: I think it is fair to say that happiness has a lot to do with expectations. For most of the last sixty years or so Koreans have gotten accustomed to high growth rates, a rapidly improving standard of living, and an education system that seemed to promise them intellectual and social advancement into the first ranks of global society and access to a strong employment market. But for the last decade or more those expectations have not been getting met to anything like the same degree as in the past. So the expectations that grew naturally out of past experience are no longer being met and satisfied, and that detracts from the happiness that Korean people should be entitled to feel after all these years of hard work.
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| Katrina Ell |
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| Antonio Fatas |
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| Alicia Garcia-Herrero |
Alicia Garcia-Herrero: Korean's unhappy reality seems to be related to the massive effort behind their economic success. Many European countries, such as Finland and Norway, have been rich for a very long so they have not had to make the sacrifices that Koreans have made during the past few decades. At the very same time, Korea has not built a huge welfare state as a way to protect its citizens in bad times _ either when unable to work due to sickness, being unemployed or simply being ill.
Rooney: Korea's education system has not kept up with its economic progress and the needs of the labor force of today. It is still far too much perspiration and rote learning instead of inspiration and imaginative thinking. This is truly Korea's most serious problem and its greatest opportunity if it were to address it properly. Also, Korea's labor supply and employment market are no longer matched and balanced in the way that they were historically, where each cohort of high school and university graduates were quickly absorbed into the workforce by industries that were hungry to employ them gainfully.
Q: Many countries in Northern Europe, including Finland, Norway, Denmark and Switzerland, make the top 10 list in the happiness index ranking every year. Why do you think those countries are always ranked at the top of the leader board?
Fatas: The northern European countries mentioned in the question all have strong social welfare programs. These programs provide a level of insurance that can increase security and happiness. Also, there can be a cultural element in how people report their happiness.
Rooney: I think another key part of happiness comes from being part of a civil society that is well organized and well run. I do not hold the Anglo-Saxon countries, such as the U.S. and Britain, high in this regard, but my sense is that those Scandinavian countries and Switzerland, perhaps together with Germany and Austria, have a better approach towards supporting the lives of their citizens.
Garcia-Herrero: We, Europeans, have a huge welfare state. We know it is not sustainable but we have it now. I actually agree with Korea's policies since it makes no sense to build something you cannot sustain but the reality is that this is shown in the happiness indices. In other words, Koreans fear the future as they are not protected. Europeans fear less as they are but the reality is that their public debt and contingent liabilities are larger so I expect young Koreans to be happier than their European peers in the future.
Rooney: There are some ways in which Korea is very well run, and I admire this country for those qualities. But there have also been notable failures where we have let ourselves down, like the Sewol disaster, the hospital epidemic failures, the construction collapses, and the deadly fires. And of course the ongoing endemic corruption that routinely puts otherwise respectable people into prison.
Q: What kind of efforts should Korea make to improve the level of happiness among Korean individuals?
Xie: There needs to be a policy change and culture change. On policy, the government should develop infrastructure to make housing more similar in functions. There should be a progressive tax on property to discourage ostentatious display of wealth. Also, East Asian societies must de-emphasize competition for children's success. Not going to Seoul National University isn't the end of the world.
Ell: Making decent headway improving employment prospects for the young would lift happiness levels of young people. Addressing high youth unemployment is easier said than done and does take time. Some useful strategies would be reducing the skills mismatch between what is taught at institutions of higher education and what is required in the private and public sector. This could be addressed via direct liaison with institutions, questioning why young, well-educated Koreans are generally not desirable employment candidates.
Fatas: As an economist my suggestion is to keep improving productivity. Increases in productivity (GDP per hour) are the drivers of increases in well-being as well as opening the door for reducing working hours and enjoying leisure.
Garcia-Herrero: Although my comments above are quite positive, I need to add a slightly negative note on Korea's society which relates to their still very limited openness. I believe that opening Korean high schools and universities to foreigners would help both in terms of future growth but also in terms of diversity of ideas and happiness overall. I recently visited Seoul and felt that it is too homogenous a society to maintain the level of innovation needed for Korea to keep its edge. Beyond growth, diversity also brings happiness if those coming bring talent and good practices.
Rooney: Weaknesses of the social and institutional structure can be a source of distress to the citizens of any country, and Korea certainly has a great opportunity to continue improving in that area. We have many strengths to build on in this country, and we just need the commitment and determination to do it right rather than shortcut or shortchange the system. Finally, I think it is important to celebrate ourselves. And the recent Winter Olympics were a great opportunity to do that.
Ell: Government incentives to firms for hiring young people and providing a useful training program so they are of long-term value to the labor market is another policy. This could involve tax incentives or subsidizing the graduates' wages. Not properly putting young people to use in the labor market leads to human capital erosion and ultimately stifles an economy's potential.
