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The End of Developmental Citizenship? Restructuring and Social Displacement in Post-Crisis South Korea

Until 1997, successive governments of South Korea had pursued "developmental citizenship" - industrialisation at a pace that created jobs and raised incomes, even if social security benefits were minimum. The late 1990s crisis ended all that: the South Korean economy has recovered and is growing strongly but the quality of life has not. Temporary and underpaid jobs have become normal and on-the-job poverty has increased sharply. Income inequality has worsened and the population under the official poverty line has sharply increased in number and as a proportion of the population.

EAST ASIA: A DECADE AFTEREconomic & Political Weekly December 15, 200767The main ideas in this paper were presented at the conference ‘A Decade After: Recovery and Adjustment since the East Asian Crisis’. The author wishes to thank conference participants for the many lucid and informative comments. Chang Kyung-Sup ( is at the Seoul National University, South Korea. The End of Developmental Citizenship? Restructuring and Social Displacement in Post-Crisis South Korea Chang Kyung-SupUntil 1997, successive governments of South Korea had pursued “developmental citizenship” – industrialisation at a pace that created jobs and raised incomes, even if social security benefits were minimum. The late 1990s crisis ended all that: the South Korean economy has recovered and is growing strongly but the quality of life has not. Temporary and underpaid jobs have become normal and on-the-job poverty has increased sharply. Income inequality has worsened and the population under the official poverty line has sharply increased in number and as a proportion of the population. Adecade after what South Koreans call “the IMF crisis”, the South Korean economy and society have been irreversibly transformed. Although they have seemingly resuscitated their economy in a manner as impressive as their earlier indus-trial take-off, most South Koreans express increasing fatigue and hopelessness about their socio-economic status. During the three pre-crisis decades, South Koreans had been enfranchised by successive developmentalist governments with what may be called developmental citizenship. Duringthat period, the South Korean developmental state managed to industrialise and expand the national economy at a pace that could economically integrate almost all economically motivated individuals. Its policy focus was to create jobs and improve incomes as rapidly as possible. However, South Koreans were denied comprehensive social security benefits that in European welfare states ensured “social citizenship” [Marshall 1964]. South Koreans responded to this dynamic economic process by mobilising private material and human resources for their own economic investment. 1 IntroductionThe economic crisis of 1997 and the emergency rescue measures adopted in response – imposed in large part by the International Monetary Fund (IMF) – dealt a fatal blow to this state grass roots interactive developmentalism. As clearly shown in official statis-tics, labour shedding was the most crucial measure for rescuing South Korean firms, many of which were on the verge of bank-ruptcy. Even after the worst moments of the crisis were over, most major firms continued to undertake organisational and technological restructuring that involved significant reductions in employment, so as to reemerge as globally competitive leading exporters. The sustained economic growth in the new century buttressed by phenomenal increases in the exports of a handful of major ‘chaebols’ has not been accompanied by meaningful improve-ments in grassroots employment and livelihood.1 Instead, tem-porary and underpaid jobs have become normal, and on-the-job poverty has increased sharply. Income inequality has been in-creasing continuously, and even those under the conservatively-set official poverty line have drastically increased in numbers and proportions. Such social polarisation may worry major South Korean firms far less than before because they are not as much dependent upon domestic labour supplies now and because their ownership, if not their management, has been internationalised at appalling
EAST ASIA: A DECADE AFTERDecember 15, 2007 Economic & Political Weekly68speeds. Foreign corporate shareholders cannot but be happy with a situation where South Korea’s economic growth is accounted for mostly by rapidly rising corporate income (as opposed to labour income). The two arguably progressive governments under Kim Dae-Jung and Roh Moo-Hyun respectively have tried to come to the rescue of grass roots South Koreans by implementing and strengthening various elements of the so-called social safety net. However, even after increasing social expenditure overmanyyears, South Korea’s public budget for social security, not to mention social services, is far behind those of other advanced industrial societies. Income transfers through public welfare programmes seem to have only marginal effects on reducing inequality and poverty. South Korea’s organised labour, de-spite its international reputation for mili-tant activism, has been surprisingly un-able to resist and redress this proletarian crisis. Their expressed willingness to co-operate with the government and busi-ness on the eve of the impending national economic crisis was only abused by the latter as a convenient pretext for unrestrained (neo-)liberali-sation of labour markets, permitting massive layoffs and for pro-liferation of underpaid transitory employment across the eco-nomy. By contrast, pledges made by the government and business to provide workers with stable employment and reasonable liveli-hood and to undertake fundamental structural reforms in own-ership and management have turned out permanent rain-checks. Paradoxically, the rapid segmentation of labour markets between surviving regular employees in large chaebols and public corpo-rations (who constitute the core of union membership) and un-derpaid temporary workers (who constitute an overwhelming majority of the newly employed) now threatens the social sustainability of organised labour. 2 Developmental Citizenship vs Social CitizenshipThe economic and social calamities accompanying the national financial collapse of 1997 paradoxically made South Koreans re-alise what kinds of social entitlements had been ensured for them during the previous few decades under the successive develop-mentalist governments. Apparently, such entitlements were not social security measures that would have stabilised living condi-tions in a volatile situation like the 1997 crisis. Whatever social programmes of the state existed it failed to alleviate in any mean-ingful sense the material difficulties of ordinary South Koreans caused by the sudden and massive unemployment amid wide-spread corporate bankruptcies. What came as a totally alien ex-perience to most South Koreans was their sudden and irreparable exclusion from work. For almost three decades, almost all willing adults not only had been employed but also used to work more hours each week than most workers elsewhere in the world. All of a sudden, their willingness to work was no more respected by the economy or the state. South Koreans’ entitlement to work had been a core element of the developmentalist rule of Park Chung-Hee and his political successors [Chang 2002], but it had not been legally codified as a political responsibility of the state. This reflected a fundamental difference of the capitalist developmental state from the socialist state, whose political constituency (i e, the proletarian popula-tion) had a citizenship right to work. Nevertheless, the constant provision of abundant jobs and business opportunities through sustained economic growth was an undeclared responsibility of the South Korean developmental state that had only limited legitimacy from historical origin and had to periodically turn to authoritarian measures for political control. As shown in Table 1, the authoritarian development state may well have taken pride in guaranteeing its political constituencies with a de fac-to entitlement to work ever since the on-set of industrialisation – a sort of “devel-opmental citizenship” as opposed to what T H Marshall (1964) dubs as “social citizenship” in the European welfare states. The unemployment rate fell dras-tically from 8.1 per cent to 2.6 per cent during the 1963-1997 period, whereas the total number of those employed nearly tripled simultaneously. Most of the new jobs were of course created in the manufacturing and service industries, so that the proportion of rural population precipitously declined. At least on the economic front, one of the most rapid urbanisations in human history coupled with an explosive population growth ensuing from the post-Korean war baby boom was success-fully managed by a political regime driven by single-minded developmentalism. Although South Koreans – middle class citizens in particular – never stopped politically challenging the historical illegitimacy and undemocratic governance of the military-led state, they nonetheless positively responded to the developmental initiative of the same political regime. They did not bother to criticise the developmentalist bias (i e, the social policy conservatism) of the state. They even allocated most of their own private material resources to “individually developmental” causes, including savings, education, etc.2 The undisputed dependence of the South Korean economic success on rich human capital and abundant savings, among various other factors, was crucially conditioned upon ordinary citizens’ active response to the developmentalist initiative of the state. In almost every opinion poll on politics, South Koreans used to choose economic performance as the foremost responsibility of each government. They believed that the government could de-termine the state of their economic life. As a result, the persisting negligence on the part of the government of social welfare objec-tives did not worry South Korean citizens. Ruled by a political re-gime satisficing [March and Simon 1958] with occasional politi-cal reminders of the necessity for preserving Confucian values of family support, South Korean citizens were equally conservative in social issues and clung to an entrepreneurially biased life. However, this kind of developmental politics and attitude turned out to be untenable in late 1997 as too many South Koreans Table 1: Sectoral Composition of Employment and Unemployment Rate (1963-1997)Years Total Number By Sector (%) Unemployment of Employed Agriculture/ Manufacture/ Services Rate (%) PersonsFisheryMining (in’000s)1963 7,563 63.0 8.7 28.3 8.11970 9,617 50.4 14.3 35.3 4.41980 13,683 34.0 22.5 43.5 5.21990 18,085 17.9 27.6 54.4 2.41997 21,048 11.0 21.4 67.6 2.6Source: NSO (1988, p 97).
EAST ASIA: A DECADE AFTEREconomic & Political Weekly December 15, 200769found themselves without any meaningful public or private mechanisms for weathering the sudden economic crisis. Deve-lopmental citizenship could not replace social citizenship permanently.3 Crisis and Neoliberal Developmental StatismAs the Asian financial crisis enveloped South Korea defying all predictions, the developmental nature of the South Korean state became unevenly dissipated between the grassroots population and business (chaebol). Saving the economy was considered tan-tamount to saving the industrial and financial enterprises. And, as shown in Table 2, so many industrial and fi-nancial enterprises were rescued only by dumping their employees under a structural readjustment programme adopted by the newly-sworn-in gov-ernment of Kim Dae-Jung under the pressure from the IMF. Even South Korea’s powerfully or-ganised unions had to compromise on this asymmetrical arrangement (see the appendix). The vague hope that the large number of discharged workers would be re-employed and brought back into the national economy after some growth recovery has been belied even after the national economy returned to a stable growth path. I have elsewhere documented the economic miseries and desperate social responses of grass roots South Koreans in the immediate wake of the econo-mic crisis [Chang 2002]. Unfortunately, as detailed in a subsequent section of this paper, such miseries and responses have not disappeared but become rou-tine aspects of life in the new century. To middle-aged South Koreans who have unsuccessfully struggled to recover their pre-crisis employment status and young South Koreans who have been denied regular (i e, non-temporary) employment opportunities from the beginning of their career, the South Korean state is clearly an anti-proletarian, neoliberal defector. Ironically, this neoliberal defection of the state in the realm of labour policy is very much an integral ele-ment of its reinstated developmental-ism focused on export industry and finance. The Kim Dae-Jung govern-ment wanted to ensure the survival of most of South Korea’s major export firms, which in turn required the survival of the financial institutions whose near-defunct or practically defunct loans to these firms threat-ened such survival. Furthermore, the government realised that the un(der)developed industry of finance was a crucial pitfall of the South Korean economy and decided to aggressively promote its international competitiveness (mainly against would-be foreign rivals in the domestic financial market). There-by was a new developmental statist project initiated in an industry whose underdevelopment was a paradoxical outcome of decades of developmental statism [Kong 2000]. The so-called “structural adjustments” of export firms and banks involved radical changes in labour relations (including, of course, massive layoffs) as well as organisational transitions in ownership and management. As an ultimate public guarantee for this simultaneously neo-liberal and developmental project, the government devised a scheme called “the public funds”.3 Under this scheme, state funds would be poured into designated banks, firms, and projects along-side pre-targeted processes of structural adjustment, in most cases, entailing massive layoffs under the rubric of “flexible labour rela-tions”. (Many may recall South Korea in the 1970s where Park Chung-Hee’s developmental state dealt with business and labour quite similarly.) In addition, the public funds helped to finance ag-gressive technological restructuring that enabled industries to radi-cally downsize the current workforce and minimise new demands for labour. Post-crisis industrial restruc-turing clearly implied “jobless eco-nomic development”.Interestingly, but not surprisingly, the IMF and other major representa-tives of global finance soon agreed on this ostensibly developmental initia-tive of the South Korean government. It was not surprising because large shares of major South Korean corpora-tions and banks had already been sold off to foreign investors at IMF-set bar-gain sale terms (in an environment of plummeting nominal prices of stocks, depreciating exchange rates, andshock-therapy interest rates). As new major stakeholders of numerous South Korean manufacturing firms andbanks (Table3), global financial institutions and inves-tors were favourably inclined to the reinstated proactive industrial policy of the South Korean state which is financially buttressed by taxes to be paid by South Korean citizens. For the same reason, they did not limit praise for the neoliberal side of the govern-ment’s policy that would ensure sustain-ed increases in corporate profits at the expense of suppressed labour incomes. Table 2: Analysis of Corporate Management Performance in First Half of 1997-98(n = 2,328)Performance item 1997 1998Total sales increase 9.1 5.0Sales profit ratio 7.5 8.8Total profit ratio 1.4 -0.4Per worker sales increase 13.9 20.0Per worker value added increase 11.4 9.3Per worker expense increase 8.3 -4.7Worker expenses to sales ratio 12.0 9.4Finance costs to sales ratio 6.2 9.3Total debt ratio (year-end for 1995-97) 396.3 387.0Source: The Bank of Korea (1998), ‘The Analysis of Corporate Management in the First Half of 1998’, unpublished report.Table 3: Foreigner Shareholding in Major South Korean Companies (2006 end; unit: %) Company Share by Restriction on Share by Difference the Biggest Foreign Foreigner (B) (B-A) Holder (A) Ownership (Reason)1 Samsung Electronics 15.94 47.24 31.42 POSCO 4.74 59.34 54.63 KB 5.46 84.32 78.864 KE 53.89 40(public) 75.48(30.2) -23.695 Shinhan Financial 9.06 60.96 51.96 Woori Financial 77.97 9.95 -68.02 7 SK Telecom 23.10 49 100.00(49) 25.9 (communication)8 Hyundai Motors 26.11 41.86 15.759 Hynix 9.16 20.19 11.0310 Hyundai Heavy Machinery 23.27 22.32 -0.9511 LGPhillips 70.78 50.53 N/A12 KT 7.99 49 97.40(47.7) 39.71 (communication)13 SK 15.65 45.27 29.6214 Hana Financial Holdings 9.62 80.64 71.0215 Shinsegye 29.61 42.85 13.2416 Lotte Shopping 68.89 21.83 -47.0517 Korea Exchange Bank 64.62 80.37 N/A18 LGElectronics 34.82 35.53 0.7119 KT&G 10.33 54.08 43.7520 Samsung Fire Insurance 18.44 53.77 35.3321 Industrial Bank of Korea 57.69 21.04 -36.6522 LGCard 22.93 1.39 -21.5423 S-Oil 35.23 48.66 N/A24 SKNetworks 40.59 49 2.09(0.01) -40.58 (communication)25 HyundaiMobis 33.49 45.35 11.8626 Daewoo Ship Building 31.26 34.07 2.8127 DaewooConstruction 32.54 11.78 -20.7628 NHN 10.47 56.82 46.3529 Doosan Heavy Machinery 41.39 20.22 -21.1730 LG 49.61 30.14 -19.47Share by foreigners was as of March 30, 2007.Source: (Herald Business, April 23, 2007).
EAST ASIA: A DECADE AFTERDecember 15, 2007 Economic & Political Weekly70Table 4: Individual vs Corporate Disposable Income Growth(unit:%) 1980-891990-962000-03Economic growth 8.7 7.9 5.6Individuals 9.9 6.6 0.3Corporations 6.1 4.3 62.6Source: Yoon Jin Ho, 2005, p 115.Figure 1: Wage Gap between Regular and Non-Regular Workers (2001-05) 2001 2003 2005Source: (Kukinews, July 22, 2007).52.549.757.360-40-20-0-Wage of regular labour = 100Table 4 reveals how successful the developmental-cum-neo-liberal policy in South Korea has been. It is nothing but startling that the spectacular growth of corporate incomes in the first few years of the new millennium had no positive impact whatsoever on worker incomes. The post-crisis South Korean economy seems to have fundamentally disenfranchised the worker population whether they actually work or not. If the rapidly increasing in-come gap between different classes of wage workers is taken into account, the figures in Table 4 indicate that a majority of the grassroots population have actually experienced income reductions. 4 The End of Growth-with-EquityMore specifically, the neoliberal policy has fundamentally altered the qualitative nature of labour relations. Along with South Korea’s rapid economic recovery, the magnitude of unemployment did decrease substantially (except for young people). However, most of the newly offered jobs are temporary contractual ones and thus do not assure stable living conditions. The so-called ‘bi-jeonggyujik’ (non-regular position) has become a norm in most of the private sectors. As shown in Figure 1, non-regular workers are offered only half the wages paid to regular workers and very few of the regular workers’ non-wage benefits. An entirely new seg-ment of the working class emerged to be abused in the process of South Korea’s rapid economic recovery. Under mounting pressure from and criticism by workers and would-be workers, the state stepped in to enact a law prohibiting discrimination based on employment status and re-quiring regularisation of employment after three years of contractual work. Its actual effect has been to generalise under-three-year contractual employment. In 2007, the first year under this law, a majority of the non-regular workers who had suffered from discrimi-natory treatment and been underpaid for three years have been made to leave their jobs (and, if they choose to, accept another three years of exploitation elsewhere). As temporary and underpaid jobs have become normal, poverty – even in absolute terms – is no more an exclusive outcome of job-lessness. That is, rapidly increasing numbers of people have suf-fered from on-the-job poverty. According to a study by a government-affiliated research organisation [Lee et al 2006:132], the proportion of employed people under the official poverty line (in terms of minimum livelihood income) increased from 5.7 per cent in 1996 to 9.2 per cent in 2000, declined slightly to 7.4 per cent in 2003, but rose again to 8.8 per cent in (the first two quarters of) 2006. The poverty rate was, of course, much higher among unem-ployed people (34.3 per cent in 2000 and 31.9 per cent in 2003) and slightly higher among economically inactive (i e, dependent) people (19.8 per cent in 2000 and 13.7 per cent in 2003).The same study documents that the poverty rate (in terms of the official poverty line) for the entire population rose from 3.1 per cent in 1996 to 8.2 per cent in 2000, and further to 10.3 per-cent in 2003 and 11.6 per cent in (the first two quarters of) 2006 (see Table 5). One out of ten Koreans has to struggle below a very conservatively estimated level of minimum livelihood.Ina related development,the Gini index jumped from only 0.2782 in 1996 to 0.3307 in 2000, and remained at similar levels of 0.3449 in 2003 and 0.3364 in 2006. A return to the “growth-with-equity” model seems well beyond sight. Even more dis-turbing are poverty gap ratios which indicate how much of the poverty line on average has to be additionally earned to escape poverty. The sharply accelerated increases in the ratio in recent years cannot but be disheartening to any concerned observer of development in the country. As of 2006, those who were officially poor earned only 55 per cent of the minimum livelihood income on average. It means not only that the proportion of people under the poverty line has risen sharply but also that such officially poor people are so much poorer now than before.Whereas poor people see their depth of poverty enlarging, rich people see their income and wealth continuously expanding. Rich households have got richer because of bloating corporate profits, soaring prices of corporate stocks, skyrocketing prices and rents of real estate, gradually rising interest rates, and so on. (The same process implies unbearable inflation in living costs such as room rents for the tenant population.) Consequently, the gap between rich and poor as measured by the inter-class ratio of household incomes has been widening. According to official gov-ernment data, the household income ratio between the richest 20 per cent and the poorest 20 per cent reached 8.22 in 2005, 8.36 in 2006, and 8.40 in the first quarter of 2007 [Yonhapnews, May 15, 2007]. 5 Social Safety Net: Neoliberal or Social Democratic?The “successful failure” of the post-crisis economic policy with regard to grassroots mass livelihoods obviously necessitated a much more active social policy stance on the part of the South Korean state. In fact, even neoliberal financial predators led by theIMF concurred on the need to urgently establish the so-called “social safety net” in this crisis-hit society. For a citizenry whose social citizenship remained hollow except for near full employ-ment, the layoff-centred economic structural adjustment could mean nothing but a total collapse of living conditions. Hence the social safety net, as a buffer against potential insurrections of stressed workers and the jobless, was as much a neoliberal as a social democratic prescription. Table 5: Gini Index, Poverty Rate, Poverty Gap Ratio (1996-2006) Gini Poverty Rate Poverty Gap Ratio Policy Poverty Relative Poverty Policy Poverty Relative Poverty Line (Minimum Line (50% of Line (Minimum Line (50% of Livelihood Income) Median Income) Livelihood Income) Median Income)1996 0.2782 3.1 9.0 27.3 27.12000 0.3307 8.2 13.4 30.4 32.02003 0.3449 10.4 16.0 35.4 36.82006 0.3364 11.6 16.7 45.0 43.32006 covers the first and second quarters only.Source: Combined from figures in Lee Hyun-Ju, et al, 2006, pp 61-67.
5 10 15 20 25 30 35 South Korea Mexico Turkey US UK Poland France Sweden
0 5 10 15 20 25 30 35 US Italy UK Germany Belgium Austria Sweden Finland Taiwan South Korea Poverty rate of disposable income (after public transfers) Poverty rate of market income
EAST ASIA: A DECADE AFTERDecember 15, 2007 Economic & Political Weekly72most of whom may have been frustrated by underpaid and unstable jobs offered in flexible labour markets.6 Such unsympathetic sentiments of the sup-posed class allies may not have been unrelated to the immediate compromise of with Hyundai Motors’ workers with their employer. Ordinary members of the organised labour force, most of whom are regular employees of large chaebol companies or public corporations (see Table 7), have sud-denly joined the rank of the “labour aristocracy” in the judgment of young netizens (and, in fact, the general public) [see Won 2007]. The neoliberal labour regime has successfully incapacitated organised labour’s public legitimacy. In a national economy with structurally segmented labour markets, labour activism is too Table 7: Union Participation Rate (2006) Total Unionised Unionisation Change Number Number Rate (%) from 2005 (in 10,000s) (in 10,000s) (% Point)Regular employees 693 150 21.6 -1.1Non-regularemployees 841 23.4 2.8 -0.4Source: Korea Non-Regular Labour Centre (2007).easily portrayed as egoism. A decade after the economic crisis, and a decade after organised labour’s ineffective re-action, South Korean labour unions find themselves paradoxically sur-rounded by critics within the proletarian population. The latter’s sentimental defection and/or economic disarticulation implies unions’ lack of reproducible social constituencies. That is, the pervasiveness of “non-regular” employment in most industries (as well as the relocation of industrial jobs overseas) has made labour activism even a demographically abortive project. It is not coincidental that national and industrial labour unions are now investing their entire energy and resources to assist non-regular workers’ struggle against opportunistic employers and the am-bivalent state. Notes1 Chaebol is a term (in Korean) for South Korean busi-ness conglomerate that operates multiple corpora-tions in diverse industries with tight ownership and management control by a family [Kang 1996]. Chae-bols’ indiscreet borrowings from international lend-ers in the 1990s were mainly held responsible for the national financial crisis of 1997 [Kong 2000]. 2 I elsewhere conceptualised this developmental atti-tude of private families with respect to education as the social investment family [Chang 2007].3 The first issue of the Whitebook of Public Fund Ad-ministration in 2002 revealed that 156.7 trillion won had been mobilised and used under this scheme by June 2002. Interests to this fund amounted to 24.3 trillion won [Ministry of Finance and Economy, Sep-tember 12, 2002].4 There are controversies over the price levels in Seoul [Hankook Ilbo, June 12, 2007]. The United Nations allocates $ 366 for a day of its official’s stay in Seoul as compared to $ 347 in New York and $ 280 in Tokyo. Business Travel News recently reported that $ 396 are needed for an American business travel-ler’s day in Seoul, making it the eighth most expen-sive among 100 top cities outside the US. The South Korean government, quoting price figures of various international agencies, insists that prices for ordinary people’s livelihood in South Korea are less expensive than in major western countries. 5 According to the 2007 edition of International Labour Organisation’s Key Indicators of the Labour Market (KILM), South Korea topped 54 countries surveyed in the annual hours of work in 2006. South Koreans who on average worked 2,305 hours in 2006 were closely followed by peoples of other Asian countries such as Bangladesh, Sri Lanka, Hong Kong, Malaysia, and Thailand, all working more than 2,200 hours annually.6 Conservative media love to make a critical issue of such cold responses of netizens to organised labour actions. See ‘Hyundai Motors Union Violence’ …Hot Internet: Netizens Anti-Union On-Line Protest’ [Korea Economic Daily, January 5, 2007].ReferencesBank of Korea (1998): ‘The Analysis of Corporate Manage-ment in the First Half of 1998’ (in Korean), unpub-lished survey report.Chang, Kyung-Sup (2002): ‘South Korean Society in the IMF Era: Compressed Capitalist Development and Social Sustainability Crisis’, Pietro P Masina (ed),Re-thinking Development in East Asia: From Illusory Mir-acle to Economic Crisis, pp189-222, Curzon, London. – (2007): ‘Politics of the Social Investment Family: Edu-cation and State-Family Relations in South Korea’, paper presented at the conference on the Changing Asian Family as a Site of (State) Politics, April 26-27, 2007, Asia Research Institute, National University of Singapore.Hankook Ilbo, Business, Labour Organisation (ILO) (2007):Key Indi-cators of the Labour Market (KILM), 5th Edition, ILO, Geneva.Kang, Myung Hun (1996): The Korean Business Conglom-erate: Chaebol Then and Now, University of California Press, Berkeley.Kong, Tat Yan (2000):The Politics of Economic Reform in South Korea: A Fragile Miracle, Routledge, London. Korea Economic Daily, Non-Regular Labour Centre (2007): ‘Union Partici-pation Rate of Regular and Non-Regular Workers’ (in Korean), unpublished report. Kuki News,, Inhoe (2006):Income Inequality and Poverty in Korea: Worsening Income Distribution and the Need for Social Policy Reform (in Korean), Seoul National University Press, Seoul.Kyunghyang Daily,, Hyun-Ju et al (2006):The Structure of Poverty in Ko-rea (in Korean), Korea Institute for Social Develop-ment and Policy Research, Seoul.March, James and Herbert Simon (1958): Organisations, Wiley, New York.Marshall, T H (1964): Class, Citizenship and Social Devel-opment, Doubleday, Garden City.Ministry of Finance and Economy, Republic of Korea (2002):Whitebook of Public Fund Administration(in Korean).National Statistical Office (NSO), Republic of Korea (1998):Fifty Years’ Economic and Social Change Seen through Statistics (in Korean).Nosajeongwiweonhoe (Labour-Business-Government Committee) (1998): ‘Labour-Business-Government Committee Co-Declaration’ (in Korean), January 20.Yonhapnews, www., Jin-Ho (2005): ‘The Causes for Income Bipolari-sation and the Direction for Policy Responses’ (in Korean), Seoul Social and Economic Research Centre (ed),The South Korean Economy: Beyond Globali-sation, Structural Adjustment, Bipolarisation, pp 110-148, Hanul, Seoul. Won, Kim (2007): ‘The Social Isolation of South Korea’s Big Factory Unions: With a Focus on Hyundai Motors in Ulsan’(in Korean), unpublished paper.Appendix: ‘Nosajeongwiweonhoe’ (Labour-Business-Government Committee) Co-Declaration of January 20, 1998 (translated by the author).(1) The government shall prepare the basis for sound economic development by sincerely accepting the responsibility for the current economic crisis and in-specting its causes thoroughly. In order to cope with the expected rapid increase of unemployment. The government shall prepare a landmark unemployment measure and a stabilisation measure for workers’ living including price stabilisation, by the end of January and seek the measures for cutting the 1998 budget and reshuffling and reducing government organisations by mid-February. Also, the government shall prepare a master plan for increasing corporate managerial transparency by the end of February, to include prohibiting the mutual payment guarantee between corporations, obliging the writing of in-tegrated financial statements, etc. In addition, the government shall make efforts to ensure the creativ-ity and autonomy of corporate management and the basic labour rights of workers and to protect the liv-ing of low income strata by expanding social security measures.(2) Corporations shall pursue active structural adjust-ments and do their best to prevent indiscreet layoffs and unfair labour practices in this process. Also, cor-porations shall take the lead for improving corporate managerial transparency, for instance, through the sincere disclosing of managerial information, and for the normalisation of corporate management, for instance, through the improvement of corporate financial structures. (3) Labour unions shall do their best to improve pro-ductivity and quality for the resuscitation and com-petitiveness strengthening of corporations and, under urgent managerial causes, make strong efforts for the adjustment of wage and working hours in order to minimise unemployment. (4) Workers and employers shall try to maintain industrial peace by solving every problem through dialogue and compromise. Also, the government shall strictly counter unlawful activities at industrial sites, which take advantage of the economic crisis. (5) We, Nosajeongwiweonhoe (Labour-Business- Government Committee), shall do our best to pre- pare environments for inviting overseas capital and, in consideration of the schedule of the provi-sional session of the national Parliament in February, reach a package settlement on the agendas agreed on and adopted by this committee as soon as possible through labour-business-government grand compromises. 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