The 38th parallel, separating north and south, is Korea’s most important dividing line. But it is only one of many

The 38th parallel, separating north and south, is Korea’s most important dividing line. But it is only one of many, says Simon Cox

Oct 26th 2013 |From the print edition

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ON A RESTLESS night in April 1970, Lee Jae-geun, one of 27 South Korean fishermen aboard a trawler in the Yellow Sea, awoke from a nightmare. He had dreamt that Korea was struck by three titanic waves, each stronger than the last. The final wave swept aside mountains, deluged the country and left the land divided. It was, he thought, a bad omen.

And so it proved. A few nights later a North Korean patrol intercepted his trawler about 50 miles south of the Northern Limit Line, a disputed maritime border between the two Koreas. Armed patrolmen boarded the trawler and abducted its crew. Most of them were repatriated later that year, but the North Koreans had grander designs for Mr Lee, hoping to train him as a spy. It was three decades before he escaped.The division between north and south remains Korea’s enduring tragedy. It was imposed in 1945 by the Allied powers that liberated the country from 35 years of cruel Japanese rule. In 1950 it was almost erased by a wave of North Korean troops that swept down the peninsula under the command of Kim Il Sung, a Soviet-backed ruler who outlasted the Soviet Union itself. Another wave of troops, mostly American but fighting under the United Nations banner, then reversed the North Korean tide. Eventually the UN forces succumbed to a third wave of Chinese troops which drove them back to the 38th parallel, a latitudinal reference line that still divides the two Koreas. Everybody ended up roughly where they had started.

On land the dividing line is painstakingly demarcated and heavily fortified. But at sea the border is both physically and legally indistinct, dogged by disputes, incursions and abductions. The South Korean government knows of over 500 of its citizens abducted since 1955 who are still missing.

Mr Lee is no longer one of them, but the country to which he escaped is not the one he left behind decades ago. Its economy, politics and culture have all changed beyond recognition. As a teenager Mr Lee had served as an errand boy for Seoul’s police and knew every nook and cranny of the city. But in the vast metropolis he returned to 30 years later, he “couldn’t tell left from right”, he says.

When he was abducted, South Korea’s income per person was about $2,000 a year (at purchasing-power parity), roughly equal to North Korea’s at the time. As a fisherman, Mr Lee counted as comfortably middle-class. By the time he returned in 2000, South Korea’s income per person had grown almost tenfold (see chart). In 2010 the country became one of only 15 in the world with a GDP of over $1 trillion.

Two years after Mr Lee’s capture, Hyundai began work on a shipyard in Ulsan, Mr Lee’s southern home town. The yard is now the biggest in the world. Its red Goliath cranes hoist walls of steel measuring 20m by 40m in nine dry docks, making vast container ships and sophisticated drilling vessels for customers from 48 countries. Internationally competitive industries like these have helped make South Korea the world’s seventh-biggest exporter of goods.

And not only goods. Instead of the waves that haunted Mr Lee’s dreams, a Korean wave of films, music and soap operas has inundated Asia and begun to spread beyond. South Korea, so long subject to foreign influence, is now influencing others. One of its diplomats heads the United Nations. Lady Gaga wears its fashions. The South Korean rapper Psy created the most-watched YouTube clip ever. Even in Pyongyang, North Korea’s capital, South Korean music and drama circulates widely, if furtively, on memory sticks and DVDs. Youngsters are wearing their hair styled like their Southern cousins.

Back in 1970 South Korea was ruled by Park Chung-hee, whose daughter, Park Geun-hye, now holds the presidency. But in the intervening years the polity she heads has travelled almost as far as the economy. Her father came to power in a coup in 1961, then in 1972 dissolved the National Assembly and introduced a newly authoritarian constitution. His daughter, by contrast, won the presidency last December in a free and fair election, South Korea’s sixth since 1987. She racked up the highest share of the vote since her father’s victory in 1971.

Poignant reminder

If South Koreans want to remind themselves of the progress they have enjoyed, they need only look north, where men on average measure up to 8cm less and die 12 years sooner. North Korea’s Kim dynasty is now in its third generation, with power passing in 2011 to Kim Jong Un, who may not yet be 30 (no one is quite sure) but models his gestures and embraces on those of his grandfather, Kim Il Sung. The country’s output of cereals, which collapsed in the mid-1990s, has only just regained the level it reached in 1982. A visiting NGO hoping to improve yields on a collective farm had to dust off agricultural techniques that had not been used in the south for decades. To help its electrical equipment cope with the north’s wild swings in current, it had to order a voltage stabiliser not seen in the south since the 1980s.

In escaping to the south, Mr Lee achieved a personal reunification that still eludes his country as a whole. But he did not find it easy. In the north he had been a mechanic, making ships’ engines, but when he looked for similar work in the south he found that it was now done by machines. Still, his predicament is shared by many older South Koreans who have not managed to keep up with a now much more sophisticated economy.

South Korea does not make best use of these older workers, who constitute a growing proportion of the country’s population. It forces many of them to retire prematurely instead of retraining and re-educating them. By contrast, it overeducates its young, who toil away in expensive crammers and devote years to preparing for the university entrance exam. Families compete with each other in an educational arms race that is almost as ruinous as the military competition with the north. Extra qualifications are a ticket to the best jobs, and the best jobs are still concentrated in the government, the banks and the chaebol (the big family-owned conglomerates).

South Korea’s working-age generation faces a triple burden. It must take care of older people, who are growing in number, younger people, who are expensive to educate, and perhaps eventually North Koreans, who will have to be integrated into the economy if the two Koreas are ever reunified. Daunted by these burdens, many South Korean women are delaying childbirth and having fewer children. The country’s fertility rate has fallen further and faster than in almost any other country. Its population, which surpassed 50m last year, is projected to fall below that number again by 2045.

Young South Koreans feel little connection with those on the other side

Many young South Koreans are trying to forget their ties to the north. Their grandfathers and great-grandfathers were preoccupied with the communist enemy, their fear and loathing kept alive by heavy propaganda during the years of dictatorship. The generation born in the 1960s, known as the 386 generation in homage to the Intel 386 microchip, was equally focused on the north, arguing that anti-communist fervour was making reconciliation and reunification impossible. Today’s southern youngsters, by contrast, feel little connection with the people on the other side of the 38th parallel. They are secretly relieved that for now reunification seems only a distant possibility. They do not burn with hatred for the north, nor do they romanticise it, as some older leftists used to do. They simply want to ignore it. But the north does not allow itself to be ignored.

Nuclear North Korea

Bad or mad?

Kim Jong Un is likely to realise his nuclear ambitions, but the two sides already face military stalemate

Oct 26th 2013 |From the print edition

UNDERNEATH THE “TOWER of the Korean War”, a monument in Seoul resembling a bronze sword, is a bunker managed by the Ministry of Public Administration and Security. Inside, visitors learn how to protect themselves from a North Korean attack, chemical (seal the windows), biological (cover your mouth and nostrils) or nuclear (find a bunker).

A squad of cadets, in the middle of their 21 months of mandatory military service, troop inside, don 3D glasses and watch a stirring televised account of the bombardment of Yeonpyeong island in November 2010 by North Korean artillery, which killed two soldiers and two civilians in the first shelling of South Korean territory since the end of the Korean war. The North Koreans, some analysts assumed, were trying to bolster their new general, Kim Jong Un, in preparation for his succession to the throne of the Kim dynasty.

After taking power on the death of his father, Kim Jong Il, in December 2011, the young Mr Kim set off another round of less deadly but more unsettling provocations. Last December his regime launched a satellite into space, beating the South Koreans by a month in their race to join the space club. In February it tested a nuclear device, North Korea’s third and most successful detonation. It promised to restart the plutonium reactor in Yongbyon, and it prevented South Korean workers crossing the border to their jobs at the Kaesong industrial complex, the only surviving joint economic initiative between the two countries. In March cyber-attacks, possibly from the north, debilitated the computer networks of three South Korean banks and three television stations. That was followed by histrionic threats to attack Guam, Okinawa, Hawaii and the American mainland itself. But even though Mr Kim comically overstates his strength, the rest of the world should not underestimate it. The North Koreans have “consistently outperformed the expectations of the outside world”, said Stephen Bosworth, a former American special representative for North Korea policy, at a Senate hearing earlier this year.

This outperformance was witnessed at first hand by Siegfried Hecker, a Stanford professor who once ran America’s Los Alamos National Laboratory. In November 2010 the North Koreans invited him to Yongbyon, the site of its plutonium nuclear reactor. They showed him a facility for enriching uranium which they said would serve a civilian purpose. Dr Hecker’s first look through the windows was “stunning”, he wrote. “We saw a modern, clean centrifuge plant of more than a thousand centrifuges all neatly aligned and plumbed below us.”

Another expert impressed by North Korea’s nuclear advances was Abdul Qadeer Khan, the godfather of Pakistan’s nuclear programme. He heaps scorn on Libya’s efforts but reserves praise for the North Koreans. They showed him the “perfect nuclear weapon”, he wrote, “technologically more advanced than ours”.

To develop a credible nuclear threat, a country has to accomplish four tasks: obtain the explosive or fissile material; incorporate the explosives into a warhead small enough to fit on a long-range missile; build a long-range missile; and secure a platform to launch it from. How far has North Korea got?

Take the tasks in reverse order. The launch platform would ideally be a stealthy submarine that could dispatch a nuclear missile even after North Korea itself had suffered a nuclear attack. North Korea’s submarines are not up to that task (although it has recently paraded a launcher that can move on land), so its launch facilities would probably not survive for long in an all-out conflict with America and South Korea. But that would give North Korea an incentive to use its nuclear weapons early if it is to use them at all.

Missiles have not only to go up but also to come down again

What about its missiles? In December North Korea launched a satellite using a three-stage rocket, the Unha-3, that would be capable of hitting the continental United States. It was a significant breakthrough. However, missiles, unlike satellites, have not only to go up but also to come down again. North Korea has not yet tested a vehicle that can make a controlled re-entry into the atmosphere and find a target.

To travel intercontinental distances, warheads must be miniaturised. According to David Albright of the Institute for Science and International Security (ISIS), it took Pakistan only ten years to miniaturise a warhead for its Ghauri missile, which was based on North Korea’s medium-range Nodong model. Since the North Koreans started on the same task at least 20 years ago, they have probably mastered it by now. The Nodong missile is capable of hitting Japan. Fitting a warhead to the longer-range Unha-3 is still several years off, Mr Albright reckons.

The core of the matter

Nuclear warheads require fissile material, either plutonium or highly enriched uranium. One way of getting hold of that is to import it. North Korea may, for example, have smuggled plutonium out of the former Soviet Union. Alternatively the fissile material can be made at home. One method is to burn natural uranium in a nuclear reactor to generate fissile plutonium. Another is to separate fissile uranium from the inert sort in a gas centrifuge. This highly enriched uranium can be used for making bombs without the bother of having a nuclear reactor.

North Korea has long experience of the first method. Its small Yongbyon reactor, which appears to have been restarted after a long pause, can make about one bomb’s worth of plutonium a year. From its past operations North Korea may also have stockpiled enough plutonium for anything from six to 18 weapons, according to a 2012 study by ISIS.

Enriching uranium is more difficult but more direct. Gas centrifuges of the kind that dazzled Mr Hecker are easier to hide than nuclear reactors, but they are tricky to build and operate. The United Nations had hoped to stall North Korea’s progress by preventing it from importing the necessary parts and materials, but two American analysts, Joshua Pollack, a consultant to the American government, and Scott Kemp, of the Massachusetts Institute of Technology, recently concluded that North Korea could now make much of the specialised equipment on its own.

Can the rest of the world stop North Korea getting any further? Probably not. America and South Korea have been trying to disarm it for two decades, using a variety of approaches, but with little success.

After power passed to the opposition in South Korea’s 1997 elections, the new president, Kim Dae-jung, experimented with a “sunshine” policy, hoping that promises of peace and reconciliation, together with dollops of aid, would persuade the north to shed its hostility. His successor, Roh Moo-hyun, continued that policy. By contrast, Lee Myung-bak, who was president from 2008 to 2013, adopted a notably tough stance, in the belief that the dictatorship was close to breakdown.

Distrustpolitik

The current president, Park Geun-hye, intends to use both carrots and sticks, rewarding the north for co-operating and punishing its provocations. She has called her approach “trustpolitik”, although “distrustpolitik” might be more apt. The south does not trust the north to keep its promises; the north does not trust the south to follow through on its admonitions.

The carrots could include a bit more aid, especially food aid and medicines. The south has already helped the north reopen the Kaesong industrial complex, a joint manufacturing hub near the border where North Korean labour combines with South Korean capital to make footwear, watches, garments and other light industrial products for export. For the north the complex is an important source of foreign exchange; for the south it is a symbol of inter-Korean co-operation.

The sticks include a sterner response to provocations such as the shelling of Yeonpyeong island. Although South Korea’s howitzers returned fire, their response was inhibited by fears of the fighting getting out of hand. The south’s armed forces are geared to defending itself or, if necessary, destroying the north. They are less well prepared to respond to the north’s pinpricks.

In pursuing the broader goal of disarmament, the only stick of substance remains sanctions. The United Nations embargo, backed by all the members of the Security Council including China, was tightened after the December satellite launch and again after the February nuclear test. It aims to ban trade in items the north might need for its weapons (such as gauges for wind tunnels), luxury goods its rulers might want for themselves (such as yachts, jewellery and racing cars) and also the foreign cash they would need to buy them.

But the sanctions remain porous. North Koreans have evaded financial curbs by couriering cash in bulk. When the UN blacklists a company, it just changes its name. Ships are renamed and reflagged. The North Koreans also convert civilian goods to military use. They once bought six off-road lorries for carrying timber and turned them into mobile missile launchers.

The trouble is that any sanctions weighty enough to stop the North Koreans realising their nuclear ambitions are unlikely to secure China’s support; conversely, any sanctions that China will support will not be enough to stop the North Koreans. This impasse reflects China’s equivocal relationship with its troublesome neighbour and North Korea’s unequivocal commitment to nuclear weapons.

By tradition, China has viewed North Korea as an ideological soulmate that can “stand sentry” against American forces stationed in South Korea, points out Ren Xiao of Fudan University. These assumptions still shape China’s dealings with the north. But some in China now say that far from providing a buffer against American influence, North Korea is a magnet for trouble, drawing America into the region. They conclude that China should abandon North Korea. Others suggest that China merely treat North Korea like any other state, helping it only when it shows respect for China’s own national interests.

In carrying out its latest missile and nuclear tests, North Korea clearly disregarded those interests. The third nuclear test even disrupted the Chinese New Year holidays, notes Mr Ren. The defiance was probably calculated, argues John Delury of Yonsei University in Seoul: North Korea’s new young leader had to show the “feisty guerrilla spirit” expected of North Korean rulers. But although his feistiness may have gone down well at home, it seems to have stuck in the craw of Xi Jinping, China’s leader. In June Mr Xi hosted a state visit from South Korea’s new president, who speaks decent Chinese and was keen to mend fences broken by her predecessor. The new warmth in their relationship was in palpable contrast to the frostiness in his dealings with the north.

China does not want a nuclear North Korea, not least because it might inspire South Korea and Japan to develop nuclear weapons of their own. But North Korea is so determined to pursue its nuclear ambitions that the Chinese would have to threaten the regime’s very existence before it abandoned them. China has the means to do so: it accounts for 70% of North Korea’s trade, runs many of its neighbour’s mines and hosts tens of thousands of North Korean workers, whose remittances are a vital source of foreign exchange. If the border were closed, the economic disruption would destabilise the regime. But that is precisely why China will not close the border. The one thing it wants even less than a nuclear north is an unstable one.

So if the regime survives, it is likely to realise its ambition for nuclear weapons. And its chances of survival seem to have improved lately. Mr Lee, the former South Korean president, pinned his expectations for North Korea’s collapse on economic failure and a botched leadership transition. But the economy has grown for the past two years, according to the south’s Bank of Korea, and exports have leapt by 90% over that period. Many North Korean children remain ill-fed: 5% still suffer from acute hunger and an appalling 32% from chronic undernutrition. But as Hazel Smith of Britain’s Cranfield University has pointed out, both these figures are much lower than in India and Indonesia, where nobody sees them as regime-changers.

Kim Jong Un also appears to have cemented his grip on power. North Korea’s political system requires “a man at the top to whom all issues are referred and from whom all wisdom flows,” said Glyn Davies, America’s special representative on North Korean policy, in testimony earlier this year. North Korea, Mr Delury points out, “is a survivor”. It is the oldest regime in East Asia, predating the People’s Republic of China by a year. Over its long life it has endured sanctions, famine and the collapse of a planned economy without succumbing.

If Kim Jong Un were to get his finger on a nuclear button, it would represent a dramatic defeat for more than two decades of international diplomacy. It would damage the credibility of America’s efforts to prevent other countries, such as Iran, arming themselves with nuclear weapons, and it would make a mockery of a string of solemn resolutions of the United Nations Security Council.

But despite all this diplomatic anguish, a fully fledged North Korean nuclear arsenal would not make much difference to the national security of either North or South Korea. Mr Kim’s dictatorship can already inflict enough damage on Seoul to deter any outside attempt to topple his regime. Likewise, South Korea, with the help of its American ally, can already deter a North Korean invasion, even if North Korea develops a more “perfect” nuclear weapon.

The damage that even a primitive weapon could inflict on South Korea does not bear thinking about, but some analysts are paid to do just that. Bruce Bennett of the RAND Corporation, a think-tank, has tried to quantify the horror of a ten-kiloton warhead exploding in Seoul. Such a weapon is not hard to make; the Americans built a bigger bomb 68 years ago. Yet it would still kill 125,000-235,000 people, Mr Bennett calculates. A similar number would suffer from radiation sickness, terrible burns and other injuries.

Enough already

And North Korea’s nuclear weapons are not the only threat it can muster. American generals trot out a grisly list of chemical and biological weapons at the regime’s disposal, spanning much of the alphabet: anthrax, botulism, cholera, haemorrhagic fever, nerve agents, plague, smallpox, typhoid and yellow fever. “Even a limited attack with these systems could cripple the…economy and panic the populace,” noted General James Thurman, who commands the combined American and South Korean forces, in testimony to Congress in 2012. His forces in Seoul are trying to defend one of the world’s great metropolises, a highly evolved, tightly knit miracle of human endeavour, ingenuity and co-ordination. It would not take much to throw such an elaborate organism into chaos.

The forces arrayed against North Korea are even more formidable: 639,000 South Korean troops, 5,300 artillery pieces and 460 combat aircraft, buttressed by over 28,000 American troops and a nuclear guarantee from the world’s only superpower. Thanks to this concentration of arms, the Korean peninsula is already locked in a military stalemate that nuclear weapons would only reconfirm.

So North Korea’s regime looks likely to survive for the foreseeable future. That will inspire mixed emotions among many South Koreans. To them, the demise of the North Korean regime and the reunification that might follow is an abstract hope mixed with concrete fears. Only about 5% of South Korea’s population has any memory of an undivided Korea, and a diminishing number has relatives in the north. The latest survey of public attitudes by the Asan Institute, a think-tank financed by Hyundai, shows that only 32% of all South Koreans, and only 18% of people in their 20s, still see North Korea as “one of us”. South Koreans would be glad to see the back of the Kim dynasty, but they are not keen to shoulder the burdens it will leave behind. They have plenty of problems of their own.

The 54th parallel

South Korea needs to make better use of its older workers

Oct 26th 2013 |From the print edition

SITTING IN SEOUL’S Tapgol Park under the bronze statue of a patriotic hero, an elderly gentleman reads his newspaper with the aid of a pocket magnifying glass. When asked, he spells out his name (“Mr Jeon”) in the Chinese characters familiar to Korea’s pre-war generation.

In his younger days Mr Jeon worked as a carpenter and builder. Now 87, he is a regular member of the park’s greying congregation: “There’s no other place to go for an old person like me.” He and his companions spend their time complaining about their ailments and corrupt politicians. “In the daytime this spot is packed.”

South Korea is ageing faster than any other country in the OECD. Last year almost 12% of the population were aged 65 or over. By 2030 that proportion will double. The number of South Koreans of working age will peak in just three years’ time, according to the OECD’s Randall Jones and Satoshi Urasawa. By 2040 their number will drop by about a fifth.

Mr Jeon thinks today’s South Koreans are less respectful of their elders than earlier generations were. But the filial piety anchored in Confucian tradition is far from dead: on the Seoul metro the young will not sit in seats reserved for the elderly, even on a crowded train. In South Korean cities senior citizens clearly feel welcome in public spaces. They can be seen swinging their legs from side to side on the exercise machines installed along popular jogging routes.

Popular culture, too, features older people. A pair of elderly couples star in the 2011 film “Late Blossom”. Another film, “Too Young to Die”, made in 2002, included a seven-minute sex scene between two people in their 70s. The elderly are also winning the attention of South Korea’s retailers. The fashionable Lotte Department Store says that a growing number of their biggest customers now are over 60. It calls them “6070 BigHands” and sells them cosmetics and golfwear for themselves and luxury clothes for their grandchildren.

Despite South Korea’s rapid urbanisation, a quarter of people over 70 still live with their children, according to a 2011 survey by the National Pension Research Institute. Mr Jeon is one of them. But the proportion is going down. And although in the countryside the old still expect the young to look after them, in cities they also look to the government for help.

Increasingly the burden of caring for the elderly is being spread across all taxpayers. Not long ago South Korea considered itself too poor to afford a welfare state. Not too long from now it will be too old to afford a generous one. The government introduced a national public pension in 1988, but even now less than a third of those aged 65 or more receive one. President Park Geun-hye had promised to provide every elderly citizen with a monthly payment of 200,000 won ($186), but last month she scaled back that pledge.

Caring for the elderly is a formidable long-term burden, but South Korea’s ageing also poses some more immediate problems. For example, it is becoming harder to staff the country’s armed forces. Over the past five years the number of men aged 18 to 35 and thus eligible for mandatory military service has dropped by over 120,000.

Once South Korea’s workforce begins to shrink, it will become even more important to get the most out of it. But for now South Korea’s employers are not using older people well. They are wasting one of the country’s biggest age cohorts, the 50-something baby-boom generation born after the Korean war. Big companies typically impose a mandatory retirement age of 56-58, and many workers are put out to pasture even earlier. According to a survey conducted by Samsung Economic Research Institute, the average white-collar worker is eased out just before his 54th birthday.

Few people who reach their firm’s official retirement age actually stop working. According to Statistics Korea, 67% of South Koreans aged 55 to 64 are still in work, or looking for it, more than the national average for all ages (62%). But only 61% of them are doing a job related to their main career.

Why are they pushed out? In South Korean firms pay and position rise with seniority, but productivity does not, say employers. Over 57% of them cite “low adaptability to change” as a reason for not keeping older workers, according to the Korea Labour Institute, a government-funded think-tank. South Korea’s baby-boomers are not good with new technology, says Woo Jae-ryong, who chose to leave Samsung Life Insurance at the age of 52 to set up a pensioners’ association. Most of his members once held senior positions in big companies, but many of them are unfamiliar with Microsoft Word, Gmail or Facebook.

Deleted too soon

New technology stumps older workers everywhere, but in South Korea the problem is compounded by the country’s compressed development. Baby-boomers spent their formative years in a less sophisticated economy and a less educated society. When they were at school, no more than 30% of their classmates went on to higher education. Today the figure is over 70%. They grew up in an economy that was building its first shipyards and steel mills. Since then the economy and technology have moved so fast that many older workers cannot keep pace.

But getting rid of them is a big waste of their talents. Even if their usefulness to the firm does not match their rising pay, they are still more productive inside the firm than in an outside job unconnected with their earlier career. .

There are two solutions to the mismatch between older workers’ productivity and their remuneration. Their skills can be updated to match their pay, or their pay can fall into line with their lower productivity. Mr Woo is all for updating their skills. The government wants to pursue both approaches. In April it passed a landmark law phasing in a minimum retirement age. By 2017 no worker under 60 will be obliged to retire. The government will even subsidise firms that embrace the new law ahead of schedule. The quid pro quo is that pay may no longer rise automatically with age. A “Tripartite Jobs Pact”, signed in May by the government, the employers and the Federation of Korean Trade Unions, encourages firms to adopt a “wage-peak” system under which employees draw their highest salaries during their most productive years, whenever those may be, with remuneration tapering off as their productivity declines.

The wage-peak system is controversial. When Standard Chartered, a bank, tied pay to performance in its South Korean subsidiary in 2011, it suffered the longest strike in Korean banking history. The system decouples age and seniority, allowing younger people to outrank and outearn their elders. Such an inversion of Confucian hierarchies still causes some discomfort in South Korea. In the past it was thought more honourable to eject senior workers from the firm than to elevate younger colleagues above them. But in recent years older workers have learned to live with younger bosses, Mr Woo says.

Internationally, there is little evidence to suggest that older workers are less productive than younger ones, according to Thomas Klassen of York University in Toronto. Their underperformance in South Korea, if real, may be a self-fulfilling prophecy, he argues. It could be the prospect of premature retirement that discourages older Koreans from investing in skills.

The Tripartite Jobs Pact fretted that growing “intergenerational conflicts are threatening social integration”. The new minimum retirement age is unpopular among youngsters who wrongly believe that jettisoning older workers will open up job opportunities for them. Older workers who resist early retirement are accused of stealing jobs from the young.

These accusations result from the old “lump of labour” fallacy—the mistaken belief that there is only so much work to go around. When the workforce expands, the economy will normally grow to accommodate it. In countries where many older people are working, the OECD points out, generally lots of young people are working too. And where the job market is weak, young and old alike have trouble finding jobs.

Bow to the inevitable

The minimum retirement age and the wage-peak system should help prevent premature retirement, easing the burden of a greying society. But is there anything South Korea can do to reverse the ageing of its population?

It could admit more immigrants. Until 2006 fewer people arrived than left. Last year the number of foreigners registered for a long-term stay was below 1m (about 2% of the population), although some think the true figure was about 1.4m. Those incomers include many women from China, Vietnam and elsewhere in developing Asia who arrive as brides for South Korean men in rural districts. Last year there were 20,600 marriages between South Korean men and foreign women, 6% of the total.

Reunification, though a distant and daunting prospect, would also rejuvenate the population a little: the median age of North Koreans is four or five years below that of South Koreans. Their fertility rate is higher, too.

But immigration and reunification will make no more than a marginal difference. Ultimately, South Korea’s ageing reflects two fundamental trends. First, South Koreans are living longer, surely something to be welcomed. And second, they are having fewer babies. South Korea’s fertility rate, at less than 1.3 children per woman, is the lowest in the OECD. The government is anxious to raise it, but to do that it needs to ensure that the burden of childrearing weighs less heavily on South Korea’s increasingly ambitious women.

A life of drudgery

In the north, as in the south, women hold up more than half the sky

Oct 26th 2013 |From the print edition

KOREA IS A “difficult country to write upon”, discovered Isabella Bird Bishop, an American travel writer, after four visits to the country in the 1890s. The position of Korean women was especially hard to describe. Under a centuries-old custom, upper-class women were first secluded in their father’s home, then shut away in their husband’s. The peasant woman, on the other hand, was “nothing but a drudge…At 30 she looks 50, and at 40 is frequently toothless.”

North Korea remains a difficult country to write upon. Thousands of foreigners now visit as tourists, but most of what is known about daily life in North Korea comes from defectors, and most of these are women, who make up almost 70% of the 25,600 defectors living in South Korea.

Kim Il Sung’s communist regime made a good start in outlawing the traditions that shocked Bird, passing a gender-equality law two years before it enacted a constitution. In 1965 almost 55% of the labour force were women, thanks in part to the carnage of the Korean war in the early 1950s. But Sonia Ryang, an anthropologist at the University of Iowa, points out that the formal commitment to gender equality, transplanted from the Soviets, did not take root. Kim was soon urging women to carry the double burden of production and reproduction, fulfilling their output quotas and also raising “the successors to our revolutions and the reserves of communist builders”. Visitors noted that at home the typical North Korean male did not lift a finger to help.

The breakdown of North Korea’s planned economy in the mid-1990s thrust women into a new role. Men had to show up at their assigned work units, but the state turned a blind eye to women who did not report for duty. This allowed women to build the informal market economy that partially replaced the collapsing planned economy. Women became retailers, petty traders and pedlars. In a survey of North Korean defectors by Marcus Noland and Stephan Haggard of the Peterson Institute for International Economics, 76% of the women had been involved in trading before they left, compared with 63% of the men. Almost half the women said they had got all their income from the market.

Those who engage in these markets still run risks. The government has criminalised a range of market activities. Those convicted face up to two years in a so-called “labour-training” facility, which are grim but less harsh than the political prison camps for which North Korea is famous. Of the women who left after 2005, 95% report paying bribes to stay out of trouble.

Women’s lives have become less regimented but no less arduous. They are now often the breadwinners, and men are doing more housework, says Hazel Smith of Cranfield University in her forthcoming book on North Korea. But as the market economy has grown, she finds, the biggest cut has gone to the Chinese trading networks that span the border, and to the wholesalers with connections in North Korea’s regime. Messrs Noland and Haggard note that as the state has thrust women into the market, “the increasingly male-dominated state preys on the increasingly female-dominated market.”

More than a century after Bird’s visit, drudgery remains the lot of many of North Korea’s women. But some things have changed. In Bird’s day, girls were so hidden away that “the brightness which girl life contributes to social existence [was] unknown in the country.” But since women have abandoned their state posts in nursery schools and child care in recent years, children now live a less supervised life. Ms Smith says that when she returned to Pyongyang in 2011 after a gap of eight years, the most striking change was much less “regimentation of children, hundreds of whom could be observed playing and moving freely” on the streets.

Snakes’ heads and dragons’ tails

It is not easy being a Korean, north or south. But at least southerners are free to redefine their dreams

Oct 26th 2013 |From the print edition

IN 2004 KIM GWANG-IL was caught crossing the Chinese border with North Korea, a trip he had made over 30 times in the previous three years to trade goods. He was sent to one of the country’s notorious camps that still hold tens of thousands of prisoners. In the detention centre he was forced to hold a stress position, as if riding a motorcycle, until his sweat filled the glass in front of him. Inmates were divided into the strong and the weak, depending on whether the guard could fit his fist between emaciated buttocks. The weak were spared heavy labour but got a smaller ration of corn soup. Everyone raced to find snakes to eat, Mr Kim says. The prison was so crowded people slept on their sides, their feet touching another inmate’s head.

After his release he waited until his mother died, then crossed the border for the last time, escaping to South Korea in February 2009 via China and Thailand. Compared with the horrors he endured in North Korea, he thinks the south is a blessed society. “Some [defectors] tend to be overambitious and expect too much,” he notes, but he is content. Even Mr Kim, though, finds some parts of South Korean life “scary”. In particular, “fierce competition”, he says: “Everyone is your competitor. That’s one thing that’s different from North Korea.”

This is a common complaint among defectors from North Korea. When Park Eun-a arrived in South Korea in 2006 at the age of 19, she was debriefed by a member of South Korea’s National Intelligence Service. “You think you can come here and you can be rich,” he told her. “But it’s really hard to get a job.” Now enrolled at Yonsei University, she appreciates the variety of South Korean life, but nonetheless finds it “really stressful”. “When I was in North Korea, all I had to think about was how to get food. It was really simple,” she says.

It is not only defectors who find the place stressful. Richard Dobbs, who has spent six years at the McKinsey Global Institute in Seoul, says it is the hardest-working McKinsey office in the world, “by an order of magnitude”. Consulting to Koreans is difficult, he says, because they have such high standards. “But I’d much rather consult to them than try and compete with them.”

South Korea is fiercely competitive partly because the stakes are high: a well-paid, secure job at a chaebol is genuinely better than a precarious position at one of their suppliers. Another reason is that people believe they can succeed through their own efforts—or at least they blame themselves if they fall short. That determination to excel extends even to their physical appearance. Many women, and a growing number of men, go under the plastic surgeon’s knife, not so much out of personal vanity but as a pragmatic response to social expectations.

North Korea, as Mr Kim says with great understatement, is different. It is also highly stratified, but people cannot improve their standing through their own efforts. Mr Kim was irrevocably condemned to the “hostile class” because his father had been studying in Japan at the time of Korea’s liberation and did not make it home until 1958. Even Mr Kim’s marriage to a woman with ties to the military did not help his cause. When he was caught crossing into China, he was given a longer sentence and sent to a harsher prison at the instigation of his wife’s family, he says, because they had always resented the match.

Loosen up

South Korea’s success has been deep but not wide. Almost half of its population lives, works and competes in Seoul. Its occupational structure is also narrow. The number of professions in South Korea is only two-thirds of the number in Japan and only 38% of that in America. This striking statistic is not lost on the South Korean government (few are). It has appointed a task force to foster 500 promising occupations, such as veterinary nurse, chiropractor and private detective.

Tyler Cowen, an economist at George Mason University, once pointed out that America has more than 3,000 halls of fame, honouring everyone from sportsmen to accountants. If people cannot reach the top of one ladder, they climb a different one. In South Korea, by contrast, people share a common definition of success. Everyone is clambering up the same set of rungs, aspiring to the same prizes and fearing similar failures. Those who say they are trying for something else are not quite believed. “People would rather be the tail of a dragon than the head of a snake,” as one journalist put it.

South Korean parents will not even embark on having a child until they are sure they have the resources to groom it for success. As a result, South Korea suffers from a shortage of happy mediocrities, countercultural rebels, slackers, dropouts and eccentrics. These people, in effect, remain unborn.

This special report has argued that South Koreans’ narrow notion of success has far-reaching consequences. It gives the chaebol a disproportionate claim on the country’s talent which is withheld from the many parts of the economy that are de facto reserved for smaller businesses. Hence large swathes of South Korea’s economy are surprisingly unproductive, operating on too small a scale with too little managerial clout or know-how.

Likewise, the labour market is divided into two tiers. In order to secure one of the top-tier jobs for their offspring, parents engage in an arms race of education spending. The cost of this helps to explain why South Korea’s fertility rate is so low. That in turn means the country will age faster than any of its peers.

The weight of South Korea’s demography is one reason why South Koreans, especially younger ones, are becoming increasingly wary of the idea of reunification. Lee Hyo Ju, who works at the Korean War Memorial, teaching people about the threat from North Korea, notes that most of her visitors are older people or foreigners. “Young people are very self-absorbed,” she says. “They don’t think it’s necessary to remember.”

More South Koreans should revisit their idea of what constitutes a good life

Ms Lee is more concerned about North Korea than most because she used to live there, working as a music teacher in the north-eastern city of Chongjin. “I loved my job,” she says. She had mastered the accordion as a child, practising for long hours, hoping to win a place at a music college against the odds. But in North Korea such efforts are futile. At school concerts the audience would hear her playing through the loudspeakers, but what they saw, miming on stage, was the child of a Korean Workers’ Party official. In 2011 she followed her husband to South Korea, swapping her higher social status in the north for a better standard of living in the south. In her first week she even worked as a lowly waitress. But at least South Korea gave her the chance to pursue a goal that is dear to her: buying a piano for her kids.

Just as some North Koreans defect to the south for a better standard of living, even if it means dropping a few places in the social pecking order, so more South Koreans should revisit their idea of what constitutes a good life, pursuing less prestigious but more satisfying careers. There are signs that more of them are doing so. Fewer high-school graduates feel the need to go on to university, and fewer families resort to extra private tuition for their children. An impressive generation of home-grown digital entrepreneurs is now setting an example for the next generation. South Korea’s fertility rate has stopped falling and may even have ticked up a bit.

Nothing sums up South Korea’s definition of success like the Gangnam neighbourhood of Seoul, home to plastic surgeons, expensive flats and stylish restaurants. But nothing out of South Korea has quite succeeded like the parody of that lifestyle by a pudgy rapper, dancing around the Gangnam area atop a steed that exists only in his imagination.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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