Essay Sample on Unemployment in South Korea

Introduction

Unemployment rates in South Korea decreased in the 4th quarter of 2018 to 8.50. This statistic was recorded in October, and the drop was written against the 3rd quarter of 2018 that capped the unemployment rate at 9.0. Throughout the period between 1985 to 2018, South Korea underwent significant transformations in their economic statuses, and there was variant; somewhat contrasting, percentages on the unemployment phenomenon (Jang, Jang, Bae, Shin & Park, 2015). The hallmark being in 2014 when it entered the trillion dollar club; that comprises of nations that have Gross Domestic Products above 1 trillion Dollars. Despite the fluctuations in percentages, it is undeniable that unemployment had a direct influence on the gross domestic product of the economy. In the year 1995 South Korea recorded an all-time low unemployment rate that stood at 3.8, and in the year 1999, it recorded an all-time high of 13.40 percent unemployment rate. The ripple effects of the variant statistics displayed themselves in the Gross Domestic Product and the variables in it. Economic policy shifts and government interventions played a critical role in shifting the unemployment rates. Variables like private consumption, government spending, foreign and domestic investment, and imports and exports not only affected the GDP of South Korea but also the employment and unemployment scales.

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Comparison With Japan

In comparison with Japan, South Korea's has almost the same economic policies and government interventions to ensure that the unemployment rate is kept at the lowest levels. Comparatively, Japan has the population of South Korea thrice as human capital, and its land mass is also two and half times larger the size of South Korea (Fleckenstein & Lee, 2017). Before their industrialization periods, the two nations operate under the same economic stimuli and they had the same stresses on the economic variables. This was facilitated by the fact that the two countries had the same trade partners. Budget deficits between the two countries are the most outstanding difference, with Japan having a deficit that is 217 times is Gross Domestic Product.

The resultant factors of unemployment are always low standards of living, high illiteracy levels, high poverty levels, low purchase parity per persons and violence. But despite the slight differences regarding land mass, population size and budget deficits, the two countries have almost the same percentages on the mentioned variables (Pyo, 2018). There are also negligible differences in the technological innovation and development scores, and two are almost inseparable concerning investment attraction, monetary policies and trade deficits. The challenges that South Korean government are practically similar to the economic difficulties of Japan and a critical analysis of the two countries may prove that point that South Korea operates on Copy Cat policies from Japan. Historically, Japan diversified its economy and expanded earlier that South Korea because of the devastating effects of World War 2. This is the same transformation that the leading countries that directly took part in World War 2 went through to stabilize their economies from the rampages of the war. The faster growth of Japan was the main contributor to its world ranking; 4th wealthiest economy worldwide, and it was the only advantage that enabled it to perform better economically than South Korea.

The unemployment rate in Japan stands at Youths are the most affected with unemployment in 4.4 percent of the entire population with youths being the most disadvantaged on the parameter. However, in matters concerning the productivity of individuals, the two countries record over 100 percent productivity. The elections in the two states are usually economically centered, with the candidates always using employment strategy to woe its supporters. South Korea has a spur in such campaigns with current president being able to claim the top sit by promising to create over 810, jobs in the government for the unemployed populace (Rhee, Done & Anderson, 2015). National security and public sector dockets were proposed to absorb most of the populace because the president believed that it is a booster to the economy. Since the youths were the group that was most affected by unemployment; currently at 21.4 percent, the South Korean government proposed that the formed slots be filled by them. However, the promise remains unfulfilled due to the laxity in enforcement of economic policies and the rigid policies that are export-centered.

Causes of Unemployment

Rigid economic policies in South Korea are the leading causes of unemployment because they are export driven. This means that the Gross Domestic Product of the nation is mainly anchored on the export variable which is a detrimental factor to all economies. The dynamics of this stress on the variable dictates that economic growth can only be visible if the nation exports more. For this to be possible the nation has to venture into new markets and get new customers to ensure prosperity; a factor that can be only possible if the nation replicates receptiveness of goods from other nation. South Korea has wholly failed to accommodate products from other nations; it mainly imports raw materials, and this dents the balance of trade books of other nations (Pyo, 2018). A clear example to emphasize the point being the year 2011 when trade ties between South Korea being cut, a matter that led to slow economic growth in South Korea until 2014 when the economy was able to readjust itself. South Korea has completely failed in diversifying its products to reach new countries and accommodate customers from different demographics. This aspect has halted the growth of industries that would have created more jobs for the population.

Solution

During its industrialization phase, South Korea resorted to importing raw materials for different industries so that it could create jobs in the economy and mark its place in the global economy by value addition. The demand for its goods was high, and this forced the government to apply for short-term loans to build more industries to produce the goods (Jang, Jang, Bae, Shin & Park, 2015). On a short-term basis, the effects were positive because of job creations and economic growth, but the short-term loans created a dent in the economy. Other factors that were emphasized during the industrialization phase were reduced consumption and increased savings and investment. Freedom of financial institutions was capped, a factor that enabled small and medium enterprises to borrow and invest; thus creating more job opportunities (Rhee, Done & Anderson, 2015). Earlier, Japan had used the same plan during its industrialization period, and it was able to grow its economy exponentially to match the Gross Domestic Products of giant nations like the United States of America.

The most important factor of economic growth is policy flexibility and government spending; an art that Japan has mastered. South Korea has completely failed to emulate the policies accommodate the policies of other trade countries by balancing trade and this has reduced inflow stream of foreign investment. The government spending of South Korea is considerably low and this evident in the number of jobs that the government creates for its population. For South Korea to lower its unemployment score it has to create flexible policies and allow free trade to boost competition in the nation (Fleckenstein & Lee, 2017). It is only through flexibility that direct foreign investors will be attracted to conduct business. Diversification of products will also lower the unemployment numbers and keep the trend sustainable because the country will be able to reach new markets and grow its GDP. It is only then their economic cycle will run because the government will grow financially and it will be able to increase its spending.

References

Fleckenstein, T., & Lee, S. C. (2017). Democratization, post-industrialization, and East Asianwelfare capitalism: the politics of welfare state reform in Japan, South Korea, andTaiwan. Journal of International and Comparative Social Policy, 33(1), 36-54

Jang, S. Y., Jang, S. I., Bae, H. C., Shin, J., & Park, E. C. (2015). Precarious employment andnew-onset severe depressive symptoms: a population-based prospective study in SouthKorea. Scandinavian journal of work, environment & health, 329-337.

Pyo, H. K. (2018). The Financial Crisis in South Korea: Anatomy and Policy Imperatives. InAsian Contagion (pp. 151-169). Routledge

Rhee, J. C., Done, N., & Anderson, G. F. (2015). Considering long-term care insurance formiddle-income countries: comparing South Korea with Japan and Germany. Healthpolicy, 119(10), 1319-1329.