South Korea


Executive Summary

Administration faces growing headwinds
At the close of the one-year observation period in November 2019, President Moon Jae-in had reached the middle of his term, with his administration facing increasing headwinds. Many of its signature achievements, such as the increased minimum wage and a work week shortened to 52 hours, have come under growing criticism from large sectors of the population and from business interests. Measures seeking to curb rising real-estate prices in Seoul and address the country’s high private household debt levels have also been criticized as ineffectual.
Government lacks majority in parliament; political battles often personalized
The further implementation of Moon’s campaign pledges (“100 policy tasks”) remains a major challenge, particularly because the government has lacked a majority in parliament. In 2019, a seemingly low-profile effort to reform the prosecutor’s office turned into a major political struggle. President Moon used his presidential privilege to appoint law professor and former civil society activist Cho Kuk as justice minister despite the lack of approval from the parliament, with lawmakers expressing concerns regarding Cho’s and his family’s ethical conduct. Cho has long had a goal of reforming the prosecutor’s office, and of transferring the power to investigate corruption among high-level government officials from prosecutors to a planned new government agency. However, this political agenda became intertwined with investigations against him and his family, with massive street demonstrations taking place both for and against him. Ultimately he had to resign as justice minister in October 2019, after just two months in office. This controversial nomination helped expose a serious problem with regard to how high-level officials are groomed and recruited. It also illustrates a long-standing problem with political struggles in Korea, which tend to be highly personalized rather than focusing on political issues.
Legacy of dictatorial
past still present
While Korea is one of the few successful democracies in East Asia and has an active civil society, the legacy of the dictatorial past can still be felt. The National Security Law and related laws still limit freedom of expression, association and assembly. In general, the society remains organized in a hierarchical way that perpetuates the polarized power struggles between elite blocks, and makes it difficult to practice everyday democracy.
Growth rates high, economy competitive
Despite the challenges from a weakening global economy and increasing tensions in trade relations, Korea is still doing relatively well in cross-OECD comparison. Growth rates are above the OECD average. Korea is a major exporter with a strong current-account surplus, and is home to many highly competitive multinational corporations that produce a great variety of products that are competitive on the world market. However, this export dependency also leaves the country vulnerable to global market volatility and growing protectionist tendencies. President Moon has tried to address this problem by promising a transition from an export-led growth model to an income-led model.
Initial social-policy
focus waning
While he initially implemented bold measures increasing the minimum wage, expanding public employment and improving the social-welfare system, the administration has over time proved more receptive to business-sector lobbying, and has backtracked from some of its original promises. While the overall unemployment rate remains low, the labor-market participation rate remains below the OECD average. Youth unemployment, precarious working conditions, exploding housing prices and old-age poverty are among the country’s most serious social issues. Social welfare and environmental sustainability remain problematic policy areas in which Korea still needs to catch up with OECD standards. Particularly with regard to the transition to a carbon-neutral economy, Korea is falling ever further behind the leaders in this field.
Some progress in
North Korea relations
With regard to international relations, President Moon has been focusing on improving relations with North Korea. This has to some extent been successful, as tensions are today much lower than under previous governments. However, tangible improvements in political and economic relations remain very limited, as neither a peace treaty nor a normalization treaty between the North and South has materialized. It seems that President Moon’s focus on summits with the North Korean leader has achieved diminishing returns, particularly as North Korea has shifted its attention to direct meetings with U.S. President Donald Trump. Beyond the North Korea question, South Korea’s international engagement remains underdeveloped, for example with regard to important issues such as climate change, poverty in the global South, and a fairer global economic and financial system.
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