SOUTH KOREA

All election affairs are managed by the National Election Commission (NEC), an independent constitutional organ. Registration of candidates and parties for national, regional and local levels is done in a free and transparent manner. Individual candidates without party affiliation are allowed to participate in national (excluding party lists), regional and local elections. Candidates can be nominated by political parties or by registered electors. Although the National Security Law (NSL) allows state authorities to block registration of “left-wing,” pro-North Korean parties and candidates, there is no evidence that this had a real impact in the 2008 parliamentary elections or the 2010 local elections. However, deposit requirements for persons applying as candidates are relatively high, as are ages of eligibility for office.

Candidates’ ease of access to the media depends on the type of media. The print media in Korea remains dominated by three big conservative newspapers with a clear political bias. However, smaller newspapers that support the opposition do exist. Access to TV and radio is more equal. Online citizens’ media has played an important role in Korean politics and in the nation’s broader Internet culture in recent years. The immensely controversial NSL also applies to online media. Nevertheless, the country’s role as one of the world’s most Internet-active societies, with almost universal access to the Internet and an increasing shift from the use of print media to online media (especially among the younger generations), the obvious conservative bias of mainstream newspapers is less and less relevant as a factor in assessing fair media access during election campaigns.

However, one particular shortcoming of free media access is the determination by the election watchdog to restrict political discussion of “hot issues” before elections. The NEC has justified this policy as a necessary means to “ensure a fair election.” For example, in April 2010, the NEC banned political parties and social organizations from discussing “hot issues” or making campaign pledges about them ahead of the local elections. Hot issues, as the NEC defined this category, went so far as to include (for example) the controversy over providing free school meals for all public school students. In addition, in 2010 the election watchdog restricted the use of the Twitter microblogging network for campaign purposes in the days before local voting took place.

All adult citizens 19 years of age or older are eligible to vote, and voter registration is fair and effective. Citizens can appeal to the National Election Commission and the courts if they feel they have been discriminated against. Citizens who are currently serving prison time, certain violators of election laws and those who committed specified crimes while holding a public office are excluded from this right.
On February 5, 2009, following a request by the Constitutional Court, the National Assembly changed the Public Official Election Act to allow overseas citizens over 19 years of age to vote in presidential elections and in National Assembly general elections. Overseas citizens are defined as Korean citizens residing in foreign countries who are permanent residents or short-term visitors.

Party and campaign financing is a controversial topic in Korea. Due to the relatively low rate of membership in political parties, candidates in elections have to spend huge amounts of money to hire supporters and place advertisements. Parties receive public subsidies according to their share of the vote in the last-held elections. However, a larger amount of campaign financing comes from private donations. Although election laws strictly regulate political contributions, efforts to make the political funding process more transparent have met with only limited success. Many cases of violations of the political funds law are revealed after almost every election, and many elected officials or parliamentarians have lost their office due to violations. The heavy penalties associated with breaking the political funds law seem to have had only limited effect on the actual behavior of politicians. Breaking the election law seems to carry little stigma, as can be seen in the case of current President Lee, who lost his parliamentary seat due to an election law violation in 1996 but was elected to be Seoul’s mayor in 2002 and president in 2007. While no slush-fund scandals of the type seen in the 1990s have recently emerged, party finance reform remains one of the most pressing issues in Korean party politics

In the 2009 Press Freedom Index, published by Reporters Without Borders, Korea placed 69 out of 175 countries. This represented a fall of 22 places compared to 2008, and was one of the lowest rankings among OECD countries. Korea was also put on the list of “countries under surveillance.” The report criticizes the prosecution of journalists from the MBC program PD Diary. Journalists were accused of exaggerating the danger of mad cow disease, an issue that triggered massive protests against the import of U.S. beef in 2008. The makers of the program were acquitted of prosecutors’ accusation that they had “defamed government officials and obstructed businesses involved in importing U.S. beef.”
Another case criticized by the report is the arrest of Internet blogger “Minerva” (whose real name was Park Dae-sung), “on the grounds that he affected ‘foreign exchange markets’ and the ‘nation’s credibility’ through his posts on the financial crisis in a discussion forum.” He too was acquitted of the charges against him.
In April 2009, South Korea’s Act on the Promotion of Information and Communications Network Utilization and User Protection was amended. The amendment requires all websites with at least 100,000 (previously 300,000) visitors per day to identify their users by their real names, a change that was criticized as a limit on the freedom of speech.
The government was also accused of replacing or influencing the replacement of chief executives of several major public broadcasters and media companies, including the Korean Broadcasting System (KBS), Korean Broadcasting Advertising Corporation, Arirang TV, Sky Life and Yonhap Television Network (YTN). Some of the new appointees are believed to be supporters of the government. Amnesty International also reported that “protests against the appointment of the new YTN President Ku Bon-hong, a former aide to President Lee Myung-bak, resulted in Ku Bon-hong suing 12 trade union journalists and firing six journalists for ‘interfering with business.’” There are also accusations that the early replacement of the president of broadcaster MBC in February 2010 was politically motivated. MBC labor unions went on strike in early April 2010 to protest the change.

The quality of media pluralism depends on the type of media. The print media is dominated by three major newspapers: Chosun Ilbo, Donga Ilbo and Joong Ang Ilbo. The combined market share of these three outlets in 2006 was 62.3%. Smaller alternative newspapers also exist. The major newspapers are politically conservative and business friendly, partly because they depend to a very large degree on advertising revenues. For example, major newspapers and websites did not review or accept advertisements for the bestselling book of former Samsung chief counsel Kim Yong-chul, “Think Samsung,” in which he accuses Samsung and Samsung Electronic Chairman Lee Kun-hee of corruption. However, as newspaper subscription rates continue to decline – dropping by almost 50% between 1996 and 2006 alone – the Internet has increasingly become one of, if not the most important source of information for South Koreans, especially among younger generations. There is more pluralism in the broadcasting sector, due to the mix of public and private media. However, the diversity of political opinions in this arena is threatened by government influence over broadcasters’ personnel policies.

The Act on Disclosure of Information by Public Agencies regulates the access to government information. The Korea Public Information Disclosure System makes available all documents described by the act. Information can also be accessed online at the Online Data Release System. If a person makes a request for the disclosure of information, the agency in possession of the information must make a decision on the petition within 15 days. Excluded from disclosure are all documents related to national security. While this is a reasonable level of exception in theory, “national security” is often interpreted in Korea to have a very wide scope.
Despite the sound legal regulations for information disclosure, there are many complaints about the policy’s practical implementation. Freedominfo.org reports that rejections of information disclosure requests without proper explanation are common. Complaints and litigation following a failure to disclose information are possible.
In a recent survey, Korean newspaper Hankyoreh and the Open Information Center for a Transparent Society found that each of 20 surveyed public institutions failed to disclose relevant information about their activities and a list of available information on their websites, even though required to do so by law.

Basic civil rights are protected by the constitution. Although courts have been reasonably effective in protecting civil rights, and a Human Rights Commission was established in 2001, a number of problems remain. Moreover, observers tend to agree that the human and civil rights situation has worsened somewhat in the 2008 – 2010 period. The National Security Law remains in place, outlawing activities that could be interpreted as “benefiting or praising” North Korea. In August 2008, members of the Socialist Workers League of Korea, including an economics professor at Yonsei University, were arrested without an arrest warrant for “forming an anti-state group.” Applications for warrants were turned down by the Seoul Central District Court a day after the arrest.
Among the most serious issues are the inadequate rights enjoyed by migrant workers, the widespread physical abuse of sex workers, the imprisonment of conscientious objectors, and the continuing use of the NSL to detain and imprison individuals believed to be sympathetic to North Korea’s communist ideology. On a more positive note, a moratorium on executions announced in late 1997 has remained in place. However, the attempt to abolish the death penalty altogether failed in parliament in February 2010.
Excessive use of police force is another subject of often-voiced complaint, as during the protests against U.S. beef imports, or the “Yongsan disaster” in which six people were killed during a clash between riot police and tenants refusing relocation during a construction project.

Political liberties are protected by the constitution, but infringements do take place. The freedoms of opinion and of the press are constitutionally guaranteed, but recent illiberal trends give cause for concern (see also Media Freedom). The freedoms of association and assembly are respected in principle. However, South Korea has not signed four of the basic conventions of the International Labor Organization, including two on the freedom of assembly. The government has repeatedly denied selected groups of employees – most recently migrant workers – the right to form unions. It is very difficult to call a strike that would be legal by official definitions. Demonstrations also require approval, which can be hard to come by as anti-government protestors learned in spring and early summer 2008.
Indeed, demonstrations are often declared to be illegal because they disrupt traffic or business. According to Amnesty International, the use of force by police at the candlelight protests against the import of U.S. beef was excessive.
Labor unions are allowed to operate in the private sector, but remain restricted in the public sector. However, labor union members are frequently imprisoned and fined for organizing “illegal strikes” or for “obstruction of business.” Businesses also sue labor unions for compensation for “lost profits” during strikes. On May 23, 2010, 183 teachers (most of them members of the Korean Teachers and Education Workers Union, KTU) were dismissed by the Ministry of Education, Science and Technology for allegedly joining the Democratic Labor Party (DLP), an opposition party, based on the fact that the individuals made private donations to the DLP. The authorities interpreted these contributions as membership fees, despite the protests of the individuals concerned to the contrary.

Discrimination is frequent in Korea. Women remain underrepresented in almost all important fields in Korea. The wage gap between men and women is on average 38%, the biggest such gap in the OECD. The unequal treatment of Korean women is reflected in various UNDP data compilations. While South Korea ranked 25th in the UNDP’s 2006 Human Development Index (HDI), and 26th in the 2006 Gender-Related Development Index (GDI), the country ranked only 68th (out of 108 countries) with respect to the Gender Empowerment Measure (GEM), which focuses on women’s roles in economic and political life.
Discrimination against gay and lesbians remains pervasive. Discrimination against irregular workers and migrant workers is also frequent. In addition to discrimination at the workplace, many migrant workers have to submit to an HIV test in order to get a work visa. Discrimination against people with handicaps has improved, although barrier-free entrances to buildings and public transportation services remain rare.
The government has tried to address discrimination based on gender and other characteristics, but with little effect. The establishment of the National Human Rights Commission (NHRC) in 2001 under the presidency of Nobel Peace Price laureate Kim Dae-jung was an important step, but this organization is not part of the executive branch, and has no direct enforcement authority. The enactment of the Disability Discrimination Act (DDA) in April 2008 constituted another important step toward better protection against discrimination. According to official data from the NHRC, a total of 1,390 cases pertaining to disability discrimination have been filed with the commission since the DDA took force, accounting for up to 50% of the total number of discrimination cases filed. The number has increased dramatically compared to the 14% share of previous years, as the DDA was expected to be relatively strictly enforced.

There have been few changes in terms of legal certainty in the last two years, and signs of both improvement and deterioration can be found. On the one hand, there are fewer complaints from investors and businesses about government intervention, a trend that reflects the government’s generally business-friendly attitude.
On the other hand, the unpredictability of prosecutors’ activities remains a problem. Unlike judges, prosecutors are not independent, and there have been cases when they have used their power to harass the political opposition even though independent courts later found accusations to be groundless. In South Korea’s “prosecutorial judicial system” this is particularly important, because it is the public prosecutor who initiates legal action. The most prominent case in recent years, in which critics argued that the prosecutor’s office acted as a “political weapon” of the executive branch, was the case against former President Roh Moo-hyun. Roh committed suicide in May 2009, deeply shamed by accusations of corruption, following a 13-hour session of questioning by state prosecutors. Prosecutors never provided proof for their accusations.

The South Korean judiciary is highly professionalized and fairly independent, though not totally free from governmental pressure. In particular, state prosecutors are from time to time ordered to launch investigations (especially into tax matters) aimed at intimidating political foes or other actors not toeing the line. The Constitutional Court has underlined its independence through a number of remarkable cases in which courts have ruled against the government. For example, a court acquitted the blogger “Minerva” (see Media Freedom), who was accused by the government of damaging the nation’s credibility and destabilizing the currency market. In another case, the makers of MBC’s PD Diary television program, which led to the protests against U.S. beef imports, were found not guilty of defamation. Courts have also thrown out many (but not all) of the cases against protesters accused of organizing illegal protests. However, there have also been cases that call the independence of the courts into question. For example, Korean Supreme Court Justice Shin Young-chul used his position to influence the decisions of subordinate courts during the trials against protesters who had demonstrated against the import of U.S. beef in 2008. Justice Shin was referred to the court’s ethics commission, but did not step down.
Under South Korea’s version of centralized constitutional review, the Constitutional Court is the only body with the power to declare a legal norm unconstitutional. However, in cases having to do with ministerial and government decrees, and with regard to the decisions of lower courts, the Supreme Court has also demanded the ability to rule on acts’ constitutionality. This has several times contributed to legal battles between the Constitutional and Supreme courts.
Nevertheless, the Constitutional Court has become a very effective guardian of the constitution since its establishment in 1989.

In February 2010, by a 5-4 vote, South Korea’s Constitutional Court upheld the constitutionality of the death penalty. Still, the court cannot be considered to hold an exclusively conservative judicial ideology or values, but rather aims to decide cases based on the merits. This was demonstrated in the court’s ruling of May 27, 2010, in which it stated that “human embryos left over from fertility treatment are not life forms and can be used for research or destroyed.” Strongly criticized by many Christian churches and denominations, this ruling saved South Korea’s thriving stem-cell research sector.

The appointment process for Constitutional Court justices generally guarantees the court’s independence. Three of the nine justices are selected by the president, three by the National Assembly and three by the judiciary, and all are appointed by the president. By custom, the opposition nominates one of the three justices appointed by the National Assembly. The head of the court is chosen by the president, with the consent of the National Assembly. Justices serve renewable terms of six years (except for the chief justice). The process is formally transparent and adequately covered by public media, although it seems fair to say that judicial appointments are not a top issue of public attention in South Korea.
Courts below the Supreme Court are staffed by the national judiciary. Judges throughout the system must pass a rigorous training system including a two-year program and two-year apprenticeship. The Judicial Research and Training Institute performs all judicial training; only those who have passed the National Judicial Examination may receive appointments.

Corruption remains a major problem in Korea, and government attempts to curb the problem are seen as mostly ineffective by the population. Korea ranked 39th out of 180 countries in the 2009 Transparency International Corruption Perception Index, up one spot from 2008. It ranked 14th out of 22 countries in the Transparency International Bribe Payers Index of 2008.
Vigilant civil society organizations regularly conduct surveys of how parliamentarians fulfill their duties. “Blacklisted” candidates running for office face problems in parliamentary elections. Though far from perfect, the blacklisting system has helped to increase voters’ awareness of problems. However, lawmakers who have been convicted for illegal fundraising and other illicit activities sometimes benefit from the presidential amnesties that are granted every year – as was the case in August 2009, when President Lee pardoned 341,000 executives, politicians and bureaucrats convicted of crimes that included fraud and embezzlement. In December 2009, President Lee pardoned Samsung Electronics Chairman Lee Kun-hee, who had been convicted of tax evasion.
Transparency International has also criticized the Lee administration’s business-friendly policies for undermining anti-corruption measures. On February 29, 2008, the Anti-Corruption and Civil Rights Commission (ACRC) was launched by the merger of the Ombudsman of Korea, the Korea
Independent Commission against Corruption and the Administrative Appeals Commission. However, ACRC commissioners are entirely appointed by the president, a provision that critics argue undermines its independence.

President Lee Myung-bak was elected as an “economic” or “CEO president,” which was a stark difference from previous elections in which economic policies played little role. According to OECD data, South Korea showed one of the OECD group’s strongest recoveries from the 2008 global recession, laying the foundation for solid subsequent growth even if cuts are made in government spending.
At the core of Lee’s economic revitalization policy was his so-called Korea 747 plan – to ensure 7% economic growth during his term, to raise Korea’s per capita income to $40,000 and make Korea the world’s seventh-largest economy. Moreover, a major strategic change under the Lee administration has been to foster innovation in the “green economy.” Thus, the government is supporting innovations in fields it considers green, such as river restoration, solar energy, LED lighting, electric vehicles and nuclear power.
Lee’s economic policies can be described as business friendly, with a focus on large companies and economic stimulus through construction projects. The government has also stimulated exports by allowing a dramatic devaluation of the Korean currency against the dollar, totaling almost 40% between early 2008 and early 2009. Ten years after the Asian financial crisis, in 2008 global financial crisis and the dramatic devaluation of the Korean won almost led to a new debt crisis. But while the government was initially hesitant, it quickly followed the lead of international attempts to provide liquidity to the financial system, implementing a large stimulus package of 6.1% of GDP in 2008, the largest such stimulus in the OECD.
Most certainly, the government will retain its expansionary economic policy stance for the time being, as it seeks to support the recovery. With respect to macroeconomic policy, inflation and job growth are likely to be targets of renewed focus, while the currency’s competitiveness could get relatively less priority due to concerns about its inflationary implications.
The government has done little to arrest real-estate speculation or high real-estate prices, both of which remain sources of substantial concern in Korea. The focus on an export-oriented and construction-driven recovery might also be risky. This strategy makes Korea vulnerable to protectionist backlashes, and prevents an adjustment of the country’s oversized construction sector. To counter these threats, the Korean government has increased efforts to sign trade agreements, particularly with the European Union and the United States.

Labor market policies have successfully kept the unemployment rate at about half the OECD average. The jobless rate reached 4% in mid-2009, up one percentage point from a year earlier. The increase in unemployment was also lower during the global economic crisis than in most other OECD countries. Youth unemployment remains relatively high at 8.5%.
This comparatively good performance can be attributed to the effects of the largest fiscal stimulus package in the OECD, the county’s export competitiveness due to massive currency devaluation, and corporatist arrangements that traded wage restraints for job security.
On the other hand, labor market policies have been less successful in preventing the proliferation of precarious working conditions and irregular employment. This problem is particularly severe for young college graduates, who have been dubbed the “88 generation” because they cannot get regular jobs, and their first irregular job or internship typically pays about 880,000 won (approximately $800 dollars) a month. The government actively supports an internship program for college graduates, but it is doubtful whether these internships can open a path to regular employment. The rate of work-related accidents in Korea is also among the highest in the OECD, pointing to lax enforcement of security standards by the government.
The overall employment rate in Korea also remains below the OECD average, due to low levels of employment among women and the lack of effectiveness of government measures designed to address this problem.

Enterprise policies have been partly successful in achieving their objectives, as a wave of bankruptcies of large companies, as took place during the Asian financial crisis, has thus far been prevented. The large fiscal stimulus and the devaluation of the currency proved particularly beneficial to large companies with strong exports. On the other hand, small and medium-sized enterprises (SMEs) were struck very hard by the crisis, and bankruptcies were rampant. Thus, the already huge gap between big companies and small and medium-sized enterprises is further widening.
Since the mid-2000s, various administrations have attempted to facilitate productivity enhancements in the SME sector through the use of investment tax credits. In addition, generous personal and corporate income tax deductions were offered in an attempt to nurture the establishment of SMEs outside the Seoul metropolitan area, but without much success.
The government also uses the entry of foreign competitors to force domestic companies to innovate. For example, it waived telecom regulations to allow the Apple iPhone into the Korean market in early 2010, seeking to force Korean cell phone makers to improve their own smartphone technology. Still, despite strong efforts by the government, the oligopolistic structure of the Korean market renders the investment climate for foreign investors difficult.

The Korean tax system is fairly effective in generating sufficient public revenues without weakening the competitive position of the national economy. Tax instruments are used to nurture FDI, R&D, and human resources development. Its main weakness, however, is equity.
Compared to other OECD countries, the tax burden in Korea is very low. As of 2009, tax revenue was about 20% of GDP (this rises to 27% after the inclusion of social security contributions). Tax revenue has been growing slowly, and is likely to increase farther in the future, as social security contributions have increased relatively fast since the middle of 1990 and will likely continue to do so.
In comparison with other OECD countries, Korea also has a low tax burden on labor income. The average tax wedge (average income tax plus employee and employer social security contributions minus cash transfers, as a percentage of total labor costs) was below the OECD average for all households in 2009.
As of 2009, there were 14 national taxes and 15 local taxes. Local tax represents about 20% of total tax revenue. Direct tax (personal income taxes (PIT) and corporate income taxes (CIT)) revenue share is about 40%; indirect taxes (especially VAT) are responsible for about 55% of national tax revenues. The share of total taxes accounted for by personal income taxes and social security contributions is the lowest among OECD countries, but Korea’s corporate income tax share is among the highest. Distribution of the PIT tax burden in Korea is comparable to that in the United States. CIT payment is fairly concentrated, with about 1,000 companies (0.3% of the total) paying 75% of the country’s total CIT.
Taxes raise revenues adequate to the government’s needs, and do not impede competitiveness. Korea has one of the lowest tax rates in the OECD. Although taxes on business are relatively high compared to personal income taxes, they do not seem to reduce overall competitiveness. The strong reliance on the value added tax gives the tax system an inequitable, regressive nature, and lessens its ability to improve equity.
One of the major reasons for the weak income tax base is relatively high number of self-employed individuals, and the low levels of income tax paid by this group; another is the sizable income-tax deduction for wages and salaries. However, in the last two years, the Lee administration has further weakened the ability of the tax system to achieve equity by reducing progressive income taxes and real-estate taxes paid by the relatively wealthy. Taxes on problematic consumption items such as energy or cigarettes remain relatively low, and the government has so far failed even to discuss an ecological tax reform.

Korea’s budget policies remain sound. It has among the OECD’s lowest levels of public debt and public expenditure. In a recent report, the Korea Institute of Public Finance said Korea’s debt ratio grew from 30.7% in late 2007 to 35.6% in 2009, but that this increase is forecast to slow and peak at 36.1% in 2010, before decreasing to 35.9% by 2013.
Nevertheless, the government has been remarkably pragmatic in abandoning what traditionally had been very conservative fiscal policies, implementing the OECD’s largest fiscal stimulus in an attempt to sustain economic growth. The country’s budgetary soundness was favorably assessed in the OECD’s March report “Preparing Fiscal Consolidation.” The actual balance of Korea’s budget (expressed in terms of percentage of nominal/potential GDP) in 2009 stood at -1.8%, fourth-healthiest among OECD countries. The report also forecast the post-crisis budget balances of the 16 G-20 nations, and Korea was among the only countries expected to record a surplus in 2010 and 2011. On the other hand, the low overall government expenditure leaves room for doubt whether, amid a maturing economy and an aging society, the Korean government is prepared to take over more responsibility, particularly with respect to increasing spending for social security and education. The recent shift of government expenditure to construction projects might also create short-term growth at the expense of long-term development prospects.

There were no major changes in the health care system during the period under review. Korea has a high-quality and inclusive medical system, and has experienced the OECD’s highest increase in life expectancy (a rise of 27 years) as compared to 1960. This success was achieved despite the second-lowest ratio of doctors per capita ratio, and a nurse per capita ratio far below the OECD average, although this situation has improved in recent years. Health spending per person has grown significantly over the past decade, but remains lower than OECD average. The public sector provides slightly more than half of all health care funding.
The universal health insurance system has relatively low premiums but high copayments. Koreans can freely choose doctors, including service at most privately owned clinics, but the scope of coverage of medical procedures is narrower than in most European countries. High copayments have the problematic effect that access to medical services depends on personal wealth.

The gap between rich and poor has widened further during the last two years, and criticism of the government’s lack of action on this issue is growing in strength. The Korean welfare system is not designed to reduce inequality, and even its capacity to prevent poverty is very limited given the very low level of social transfer payments. These small payments force unemployed individuals to accept any job offer, even if wages are much lower than in their previous employment. This explains why Korea has the highest share of working poor in the OECD. The welfare system also depends on family-based security, in which parents are willing to support their children even after completion of a university degree. In Korea, it is also common that the more well-off members of a group (colleagues, friends, high school alumni, etc.) invite less-fortunate members, so that these individuals can continue to participate in social activities. However, in Korea’s increasingly money- and consumption-oriented society, poverty is becoming a source of shame, which partly explains the low levels of life satisfaction in Korea.
In the past two years, the Lee administration has shown little enthusiasm for the previous government’s plan to transform Korea into a modern welfare state. Rather, Lee has sought to solve social problems through high growth rates and job creation linked to public work programs and infrastructure projects. Furthermore, the recent massive influx of North Korean defectors from low social classes has made the issue of their integration into South Korea’s workforce worrisome. Available data on the work integration of North Korean defectors casts a spotlight on this group’s marginalization in the primary labor market, as well as on other indicators of their poor level of work integration.

As with preceding governments, the Lee administration has not been very effective in enabling women to combine parenting with participation in the labor market. This can be seen in the country’s low fertility rate as well as in women’s low labor-market participation rate. The traditional Confucian family values that view women as mothers and housewives remain strongly influential. High housing prices and high costs of education are the most important factors in young couples’ decision not to have children. In recent years, the government has been alarmed by the dramatic drop in fertility, and various policies are under way or under discussion; however, most policies adopted thus far have proved inadequate in helping women combine employment and parenthood. For example, the government is currently discussing the introduction of a child benefit system. There have also been more controversial reactions to the low fertility rate. For example, the government has started cracking down on abortions, which are illegal in South Korea but had been tolerated since the 1970s, when Korea was trying to bring down its birth rate.

The average age of Korea’s population is rising much faster than is the case in many other OECD countries. The share of the population 65 years old or more will increase from 7% in 2000 to 37% in 2050. This relatively quick demographic shift is taking place in part because Korea has been very successful in reducing infant mortality rates and increasing life expectancy, while failing to maintain birth rates near the replacement rate. Since 1996, the fertility rate has dropped from 1.6 babies per woman, just below the OECD average, to less than 1.2 children per woman. Korea now has the lowest birth rate of any OECD country.
Old age remains a major source of poverty in Korea, as pension payments are low and most older people today lack coverage under a pension system that did not cover a large share of the working force until expansion of the program in 1999. The government has also failed to enforce mandatory participation in the system, and many employers fail to register their employees for participation. The pension system is currently fiscally sustainable and needs only small subsidies. This is because the pension system is organized in the form of a pension fund, and contributors currently far outnumber pension recipients. However, given the risks involved in pension funds, it is not clear what level of subsidies the fund will require once the contributors who have entered since 1999 retire. Three older and much smaller pension funds for government employees, military personnel and teachers are already running deficits and have to be subsidized by the government. Given the low fertility rate and the aging of Korea’s society, the country’s pension funds will almost certainly need more subsidies in the future.
Korea’s pension funds also seem to be vulnerable to government interference. For example, in 2008 the government told the National Pension Fund to invest a larger share of its assets in Korean stocks, seeking to stabilize the stock market during the global financial crisis.

Since the 1990s, South Korea has transformed itself into a society that attracts immigrants rather than providing them for other nations. Driven by increasing demand for cheap labor, generational change and a shortage of women in rural areas, the number of foreign residents has increased considerably. As of March 2010, Korea was home to 870,636 registered overseas nationals, with 255,000 of these individuals living in Seoul.
In August 2005, parliament passed the “Public Official Election Act,” a suffrage law that allowed foreign residents to vote in local elections alongside Korean citizens. South Korea currently remains the only Asian country which gives voting rights to noncitizens.
In recent years Korea has made it easier for migrants to receive permanent resident status and even citizenship, particularly for highly skilled migrants. To apply for Korean citizenship, an individual must have resided in Korea for more than five consecutive years, be legally an adult, have displayed good conduct, have the ability to support himself or herself on the basis of his or her own assets or skills (or be a dependent member of a family) and have basic knowledge befitting a Korean national (such as understanding of Korea’s language, customs and culture). In April 2010, the Korean parliament also passed a law that allows dual citizenship.
Another relatively serious integration issue concerns the societal exclusion experienced by the foreign-born wives of Korean men (often from China, Southeast and South Asia). This population has drastically increased in recent years (about 10% of all marriages in South Korea are international today, in the sense that either bride or groom is non-Korean), and often faces cultural discrimination. Furthermore, cultural, education and social policies have yet to adapt to the fact of increasing immigration levels.
While ethnic Koreans with foreign passports, foreign investors and highly educated foreigners are welcomed and treated favorably, Amnesty International reports that migrant blue-collar workers are often treated as “disposable labor.” From a legal perspective, migrant workers have very similar rights to native Korean employees, but these rights are routinely neglected by employers. While courts have offered some protection to migrant workers, the government has not pursued active enforcement measures against employers that exploit this population’s precarious status.
In the early days of the global economic downturn, in September 2008, the new Korean government announced it would deport about half of all migrant workers with precarious (“irregular”) work contracts until 2012.

Korea’s security situation remains precarious due to the lack of a peace treaty with North Korea, despite the signing of the armistice ending the Korean War 57 years ago. The militaristic and extremely nationalistic regime in North Korea remains a major threat to South Korea’s security. In this environment, successive Korean governments have been relatively successful in preserving peace, albeit under clear leadership by the United States, which retains command over the Korean military in times of war. The Korean armed forces are well funded, with defense spending totaling 4.3% of GDP, the third-largest such share in the OECD. South Korea’s security still depends on the presence of U.S. forces and U.S. security guarantees. The other major partner in the country’s trilateral security cooperation is Japan.
In the last two years the security situation has arguably weakened due to the deteriorating relationship with North Korea, North Korea’s development of nuclear weapons and the northern neighbor’s tests of long-range missiles. In reaction to U.N. sanctions following one of these missile tests, North Korea pulled out of the six-party talks that had been the only functional regional mechanism allowing negotiation with the communist state.
The Lee administration has canceled most aid for North Korea, and suspended a tourism project after a South Korean tourist was shot by a North Korean guard for trespassing. In turn, North Korea is questioning the future of the Kaesong Industrial Park, a package of South Korean investments in North Korea. As a result, trade between the two Koreas is declining. The weakening economic ties with its northern neighbor have in turn substantially limited the South Korean government’s leverage.
The sinking of the South Korean corvette Cheonan in March 2010 offered another test of the South Korean government’s ability to preserve peace and stability in the region. Even today, it is unclear whether North Korea was in fact involved in the incident and it remains too early to assess the situation fully. However, the Cheonan incident has deepened concerns about the capacity of the South Korean armed forces to deal with a crisis situation. In this context, is not easy for Korea to promote its own security concerns, and its willingness to cooperate in order to advance this goal is understandably quite large.
Though these remain limited, South Korea has begun military exchanges with China, another measure aimed at adapting to a changing security environment. Beyond the Korean peninsula, the South Korean government also actively participates in international cooperative efforts targeting terrorism and organized crime, and participates actively in U.N. peacekeeping missions.

While police statistics show a small increase in both violent crime and street crimes over the last few years, the crime rate in South Korea is low by international standards. The country has very strong gun control laws, making crimes involving firearms rare. There is no known terrorist activity in South Korea. A major concern in Korea that has not yet been effectively addressed is the spread of cybercrime, whose perpetrators take advantage of Korea’s excellent broadband infrastructure and lax online security measures.
Most reported crimes involve pickpocketing in tourist areas and crowded markets, and are predominately non-violent in nature. Criminal perpetrators are usually deterred by the risk of confrontation and engage principally in crimes by stealth. The lax enforcement of traffic laws remains another major concern, as Korea continues to have among the OECD’s highest road-fatality statistics.

Environmental policies are currently insufficient to protect the environment or to preserve the sustainability of resources. In the last two years, contradictory trends concerning environmental policies have emerged. On the one hand, the current Lee administration has put “green growth” at the center of its agenda, and environmental policies have entered the political mainstream. The government is strongly supporting new technologies and is helping Korean companies to develop “green” products such as hybrid and electrical vehicles and LED-based lighting and displays. The Seoul government has also promised to drastically expand bike paths, although most of these paths are planned for recreational use and will thus reduce commuter traffic only marginally. Public transportation is also steadily improving, with new subway lines and an airport railway under construction.
On the other hand, much of this so-called green growth can be seen as simply a new name for industrial and infrastructure policies. A considerable amount of the investment associated with the drive has been earmarked for the environmentally very controversial Four Rivers Project, which includes the construction of artificial waterways and dams. Huge amounts of public funds are also being used to develop, build and export new nuclear power plants. Furthermore, whenever environmental policies have conflicted with business interests, the environment has clearly taken a back seat.
Despite the need to account for the costs of environmental degradation in energy prices, the Korean government actually lowered the gasoline tax in 2008 following the international rise in oil prices. Korea has shown the OECD’s largest increase in CO2 emissions since the 1990s. In 2009, Korea announced that it plans to reduce or at least slow the increase in the country’s CO2 emissions; however, there has been little appetite shown for moving Korea from its developing country status in the Kyoto protocol into the Annex 1 category.

The Korean government invests heavily in research and innovation, particularly in those fields that can be directly commercialized. The green growth policy is a good example of the government’s willingness to support domestic industry’s research and development of new products or production techniques. The government also uses protectionist measures that help Korean companies to develop indigenous technologies without facing competition. One example of this infant-stage technology protection is the requirement that all mobile phones sold in Korea must support a particular Korean Internet platform. Such trade barriers have resulted in the complete dominance of Korean mobile phone makers in the Korean market, because it is too expensive for foreign companies design special models just for the Korean market. In November 2009, the Korean government granted an exemption from the local requirement rule for the Apple iPhone, but the rule otherwise remains in place.
The Korean government started investing in modern telecommunication infrastructure early, although it has seemed to lose its competitive edge as other countries catch up.
Weaknesses include a lack of high-quality fundamental research that cannot easily be commercialized. The ever-increasing dominance of large business conglomerates (chaebol) impedes the rise of small and medium-sized enterprises, as well as the startups that are often the source of new innovations (as opposed to incremental ones).

Koreans are well known for their focus on education and good performance on tests such as the Program for International Student Assessment (PISA). The country’s tertiary education enrollment rate is high. Education policies are hotly debated, and are an important priority for the government. About 16% of the general government budget is earmarked for education, considerably more than the 13% OECD average.
However, the Korean government budget is small compared to other OECD countries; thus, education spending accounts for a 4.5% share of GDP, as compared to an OECD average of 4.9%. Government spending on university education is particularly low, supporting only about 10% of the student population. By contrast, private education expenditure is 2.9% of GDP, by far the highest level in the OECD and about three times the OECD average. Thus, much of the success of Korean education can be attributed to parents’ willingness to pay for education rather than to public policies.
Almost all parties involved in the field of higher education agree that a change in the Korean system is both necessary and of high priority. There are many complaints about the curriculum content and the authoritarian teaching styles at Korean schools and universities. A particularly controversial issue focuses on entrance exams, which critics see as a major cause of weak analytical and debating skills. Often, cramming is favored over analytic skills, discussion and creativity.