Monday, 10 Dec 2018
World

The president of South Korea once decried the powerful tycoons. Now, he needs them to woo Pyongyang.


Members of South Korean trade unions take part in an anti-government rally to strengthen workers' protection during a November 21 strike in Seoul. The country's unions have accused the administration of President Moon Jae-in of joining powerful conglomerates to backtrack on labor policies. (Woohae Cho / Getty Images)

South Korean President Moon Jae-in came to power last year in the wake of a wave of anger over corruption and collusion between the country's political elite and the huge conglomerates ruled by rival families. the economy.

A candlelight revolution that brought hundreds of thousands of people to the streets led to the dismissal of Moon's predecessor Park Geun-hye – and ultimately to his imprisonment.

In January 2017, while he was preparing to run for the presidency, Moon called for the removal of the "deep evil" conglomerates, or chaebols, in order to create a more equitable economy.

Today, at 18 months of his term, Moon is still talking about "democratizing" the economy, but his anger against the plutocrats seems to have dissipated. Instead of challenging the powerful chaebols, which include global brands such as Samsung, LG and Hyundai, Moon is talking about boosting their "international competitiveness".

The change was motivated by factors beyond its control: the aging of the population, the shrinking of the workforce and the fierce competition from China.

However, it is also clear that South Korean mega-companies have become key partners in its North Korea work.

This impression was reinforced when the South Korean President gathered in Pyongyang, in September, the heads of the four largest chaebols, in a large business delegation, to convince them to try to unravel economic development. in front of North Korean leader Kim Jong Un.

This created something shared image for Moon.

His openings in North Korea have earned him many accolades. But as his zeal to reform the economy diminishes, his popularity diminishes.

In April, when he met Kim for a historic summit on their common border, Moon's approval rate was 77.4 percent, according to a Realmeter poll. At the end of November, it stood at 48.8%, its lowest level since coming to power.

According to pollsters, the reason for this is largely the economy – with a hint of disappointment that the US-led nuclear talks with the North seem to be bogged down.

South Korea, once one of Asia's fiercest "tiger economies," has lost its roar. The economy is growing at about 2.5% a year and unemployment is 3.9%.

Yet even when Moon was trying to build a fairer economy, it seemed like it was disappointing companies and workers.

A 16 per cent increase in the minimum wage and a 52-hour work week limitation – instead of 68 – shocked the country's myriad of small and medium-sized business owners. Many of these companies supply parts and components to large conglomerates and account for 90% of the country's jobs.

They feared that their already thin margins would be reduced to a breaking point by rising wages.

The unions are also angry. Moon has betrayed the promise of a larger increase in the minimum wage, they say. Trade union leaders also see the introduction of greater flexibility in limiting working time as a means of exploiting workers.

On November 21, the Korean Confederation of Trade Unions mobilized more than 150,000 workers for a day of strikes. Unions have accused the Moon administration of "joining the chaebols" to backtrack on labor policies.

It is difficult to avoid the feeling that Moon's spirit is elsewhere, her energy and enthusiasm being more devoted to the search for peace with North Korea than to the reform of the economy of the South. criticism.

If so, it could turn around.

Eun Hee Woo, researcher affiliated with the Graduate School of East Asian Studies at the Freie Universität Berlin, says that Moon's declining popularity could undermine his support from his own party. This in turn could undermine efforts to make peace with North Korea.

"In other words, if Moon fails to dispel its low economic reputation, the positive developments we saw between the two Koreas under its presidency could come to an abrupt end," he said. she writes for the East Asia Forum.

In fact, there may be a more fundamental reason for Moon's reluctance to act decisively against the chaebols, says Park Sangin, a professor at Seoul's Graduate School of Public Administration.

The chaebols are simply too powerful and their influence extends deep into parliament, the judiciary, the media and academia, he said. Challenging the chaebols risks "the possibility of sabotage" against Moon's leadership, Park added.

This year, the two previous South Korean presidents, Park Geun-hye and Lee Myung-bak, were sentenced to 25 and 15 years in prison respectively for corruption. Samsung's Lee Jae-yong, however, was released after only a year in prison, while Shin Dong-bin, of retail giant Lotte, served an eight-month jail sentence on similar charges.


Lee Jae-yong, vice president of Samsung Electronics, goes to the Seoul District Central Court for his trial in 2017. He was convicted of corruption and released after only one year in prison, testifying to the 39 influence by large conglomerates such as Samsung. most members of South Korean society. (JUNG YEON-JE / AFP / Getty Images)

Professor Park says that shows where the real power lies.

"This is why it is difficult in Korea to make a fundamental change – even after the civil demonstrations by candlelight, even after the president comes to power claiming to be a kind of reformist" , did he declare.

Chaebols have been at the heart of the strength of the tiger economy over the past decades, helping to provide resources for small suppliers to grow and guiding Japan's export-led "catch-up" strategy.

Today, experts say, they hinder the innovation that South Korea's economy desperately needs.

"The economy is blocked by chaebols and there is no opportunity for innovation, no incentive for innovation," Park said. "Without fundamental structural change, the Korean economy does not have a future."

Kim Sang-jo, an anti-chaebol activist appointed to head the Korean Fair Trade Commission, is the embodiment of the hope of reform. Kim was nicknamed the "Chaebol Sniper" and was following a request for information regarding bribes paid to politicians.

In the government, Kim is less outspoken. He now says that chaebols are "the core of our country's competitive power." Rather than dissociate them, he wants to create incentives for voluntary "behavioral change" by amending competition law and initiating investigations into cases in which chaebols are suspected of violating existing laws.

"The moon government came after the candlelight revolution," he said. "My job is to end the revolution by evolution."

Min Joo Kim contributed to this report.

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