Onward, Industrial Soldiers
A little over a century ago, Koreans were considered indolent. Legendary traveler and writer Isabella Bird Bishop visited Korea in 1897 and wrote, “Seoul is a boring, dirty, and dead city. The people are lazy and slothful.” Call of the Wild author Jack London, who spent four months in the country, also wrote in 1904 that Koreans were “weak and lazy.” The Japanese colonizers appear to have taken the same view: Okita Kinjo, in an unpleasant book named Korea, Behind the Mask (1905), called Koreans “the world’s laziest people,” adding that the country’s only “products” were “shit, tobacco, lice, kisaeng [roughly, a Korean geisha equivalent], tigers, pigs, and flies.”
Today’s South Korean workers have a very different image. As the hardest working people in the OECD, they are the very model of industriousness. In 2008, the average Korean clocked a total of 2,357 hours at the office. From the 1960s onwards, they have worked under tough, somewhat militaristic conditions. Rank and organizational hierarchy are of great importance, and workers are expected to be loyal to their employers, despite a lack of genuine “jobs for life.” So, how did this turnaround in image come about? Why did an extreme attitude to work develop? And how are recent economic, legal, and social changes undermining it?
Park Chung-hee, Again
General Park Chung-hee’s influence can still be discerned in many disparate areas in today’s South Korea, from the country’s preoccupation with economic statistics to its love of unchallenging, saccharine pop ballads (see chapter 22). The way in which Koreans work also bears his imprint. Following his coup in 1961, General Park began to develop an export-oriented growth model centered on chaebol. Since South Korea was very poor and lacked capital and technology, he realized the country would have to make up the difference through low-wage, intensive labor as the main basis of production. He needed millions of disciplined, hard-working young people to generate rapid economic growth, in order to fulfill his twin objectives of overtaking North Korea and lifting the nation out of poverty.
General Park was fortunate in two respects. The first had to do with education. Syngman Rhee’s drive to achieve universal schooling meant that the young adults at General Park’s disposal were probably better educated than those in any other poor country. Between 1945 and 1970, adult literacy rose from 22 to 87.6 percent. Furthermore, Korea’s Confucian legacy and the traditional importance of the memorization-intensive civil service exams had led to a school system that focused on discipline and rote learning rather than imagination. This produced a generation of young workers who were ready to take orders and not ask too many questions. In today’s high-wage economy, where creativity is increasingly required, these traits are less desirable. However, at a time when factories needed disciplined workers who could follow instructions, they were very useful.
The schools also inculcated ethnic nationalism in their pupils. South Korea was a very young state and had escaped from the Japanese colonial nightmare only to be cast into a brutal war with the North. In order to restore national pride and foster a sense of unity, the people were taught that they were the products of an unbroken five-thousand-year line descending all the way from Dangun, the legendary founder of Korea. General Park was able to harness this ethnic nationalism and put to use the sense of pride and unity it fostered in convincing Korean workers to make the country great through industrial development. Children continued to be indoctrinated with ethnic nationalism into the 1980s. One informant now in his mid-thirties recalls, “In school, we were taught that we were special because we had ‘pure blood.’ It’s ridiculous to think of it now, but I believed it at the time.”
General Park was also fortunate in having a workforce that had undergone the experience of conscription. Because of the North Korean threat, all healthy South Korean males were obliged to serve for over two years in the military. (This obligation still exists, though it has been shortened slightly, to one year and nine months.) Most men going to the factories at the time would have had military experience. As a soldier himself, General Park must have realized the potential for harnessing the discipline and nationalism inherent in the military for use in industry. It is no coincidence that his state called upon the people to be “saneop jeonsadeul”—industrial soldiers.
Park’s government presented industrialization as a kind of “sacred quest to revive the nation,” in the words of one former industrial soldier. One was not simply working for Samsung, Hyundai, or Lucky Goldstar (LG): one was working to build the nation and restore the pride of the Korean race. That sacred quest required sacrifice: by 1971, the average Korean worker put in 51.6 hours per week. This is the recorded figure, but it is likely to have underestimated the real number of hours worked. Saturdays were also workdays. Until a legal change in 2004 abolished compulsory Saturday work at companies with over 1,000 employees, Koreans had one-day weekends.
The idea of the sacred quest was important for bringing women into the labor force too. According to traditional Korean neo-Confucianism, a woman’s place was in the home, with the family. General Park, however, wanted young women to move away from their families and come to big cities like Seoul, to work in factories. According to anthropologist Kim Seung-kyung, this radical change was made possible by presenting factory work as a patriotic duty, necessary only during the period of rapid industrialization. Women were to sacrifice their natural roles temporarily, out of loyalty to the nation and the Korean people.
In a book entitled Sweatshop Warriors, Miriam Ching Yoon Louie states that the Park government even built up South Korea’s sex industry as a means of earning foreign exchange receipts from Japanese businessmen and American soldiers on leave from the Vietnam War—all “for the sake of the nation.” An article in the New York Times by Choe Sang-hun quotes one former prostitute as saying, “The government was one big pimp for the U.S. military.... They urged us to sell as much as possible to the GIs, praising us as ‘dollar-earning patriots.’”
The Korean Workplace
Although General Park detested Confucianism, blaming it for South Korea’s earlier lack of enterprising spirit—the yangban aristocracy, for one, had disdained work as being beneath their station —his chaebol system benefitted heavily from Korea’s Confucian legacy. Neo-Confucianism’s influence throughout the Joseon era had ingrained in Koreans a paternalistic, top-down mentality that the South Koreans of the 1960s still possessed. A cultural habit of deference to authority enabled Park to effectively command the chaebol heads, who were in turn able to command their employees.
Like a Confucian father, the chaebol head ruled sternly but with a sense of responsibility. The hours for workers were of course long, and weekends and evenings at the factory or office were commonplace. Compulsory company outings and drinking sessions were instituted, to build up the sense among workers that they were part of a family, rather than a mere company. Daewoo Group even referred to itself as “Daewoo Gajok” (Daewoo Family). Workers would receive birthday gifts, and bosses would step in to arrange dates for staff in need of marriage partners. Such practices still occurs in many Korean firms. In 2011 it was reported in the Korean press that ten single men and women from Hana Bank and ten single men and women from Kookmin Bank were given a group blind-date by management of the two firms.
Large Korean firms have always tended to be very hierarchical. Again, owing to the influence of Confucianism, it is very rare for someone to challenge a superior or raise doubts about a particular decision. Furthermore, there is never any doubt about who is superior to whom: nearly all firms use the same range of job titles. There are up to six levels of non-executive employee: sawon (entry level), daeri, gwa-jang, cha-jang, team-jang, and bu-jang (the highest, a head of department); then, there are as many as eight executive levels: isa (lowest level director), sangmu, jeonmu, bu-sajang, sajang, bu-hoehang, hoejang, and finally daepyo isa (literally, “representative director,” which is essentially a CEO). Among the non-executive titles, three positions, gwa-jang, cha-jang, and team-jang (“team” from the English word) correspond to different levels of manager. Among the executive positions, the hoejang (chairman) is usually most powerful in practice, for this title is mostly used for the company founder and/or controlling shareholder. In accordance with Confucian tradition, promotion is mostly based on age and time served, and so a brilliant thirty-three-year-old is likely to be outranked by an average thirty-seven-year-old. Top directors are typically in their late fifties or sixties.
Working for a Korean firm, particularly a chaebol, was never a matter of merely exchanging one’s time and labor for money. Firms like Hyundai wanted to hire young men who would sacrifice themselves for the overall corporate cause and stay with the firm throughout their careers. Recruitment policies reflected this: rather than simply taking up a desk after passing interviews, new hires were subjected to tough initiation tests, as though they were joining an American university fraternity or secret society. One man who joined Hyundai in the 1970s and later became a senior executive tells of being “left up on a mountain, without a map. It was dark and cold, and we had to get to a target destination by sunrise.” Hyundai chairman Jeong Ju-young was also said to be fond of challenging his employees to wrestling matches.
Chaebol had their own company songs, which new recruits were encouraged to sing in unison at training camps to which they were sent after being hired. LG’s song, according to a paper by Song Young-hak and Christopher Meek on “The Impact of Culture and the Management Values and Beliefs of Korean Firms,” contains the following lines:
We are industrial soldiers leading the times,
With our new and continuous creativity and study,
And where we accomplish our holy mission,
There is happiness for our race and mankind.
Here we can clearly see General Park’s notion of “industrial soldiers” and the “holy mission” of export-led growth and industrialization being promulgated by one of his government’s most trusted chaebol. The use of the word “race” is also telling, as it underscores the usefulness of ethnic nationalism in convincing people of the value of the industrialization project.
“We Are Not Machines”
Despite the power of ethnic nationalism and the occasional kindness of a paternalistic chairman, it should never be assumed that Korean workers in the 1960s and 1970s were happy with their lot. Not everyone accepted the “holy mission.” In 1970, a twenty-two-year old textile worker named Jeon Tae-il committed suicide by burning himself to death, after shouting, “We are not machines!” His own work conditions were particularly terrible: he had worked at Pyeonghwa market in the north of Seoul, where tuberculosis was rampant due to a lack of ventilation, and workers were forcibly given injections of amphetamines in order to keep them working around the clock. He had previously complained to the authorities about such practices but had been told to stop being unpatriotic.
Jeon Tae-il is a hero to the Korean working class. His sacrifice raised consciousness of the plight of the workers and helped inspire the eventual growth of proper trade unions in the years following democratization. During Park Chung Hee’s rule, only one union, the Federation of Korean Trade Unions, was allowed. The FKTU did not truly fulfill the functions of a union, since its executive committee was selected by the government. Park saw the FKTU’s role as that of transmitting government policy down to the workers, rather than enabling the workers to resist poor treatment under the government-business compact.
Though the legions of factory workers were indeed building the nation during the 1960s and 1970s, they were not compensated well for it. One of the reasons South Korea became such a strong exporter was that wages were held down throughout the entire Park era, which served to increase the price competitiveness of Korean products. Between 1963 and 1971, GDP per capita increased from US$100 to $289. Wages though rose only 58 percent during that time. The lion’s share of the benefit of growth accrued to the chaebol.
Similarly, while workers were encouraged to devote themselves to their companies and think of their companies as being like family, there was no real “jobs for life” culture in exchange, as there were in Japan. Workers were expected to be loyal to their employers rather than move from place to place as is the norm in Western countries. Their loyalty was not fully reciprocated by the company, though, as most workers were forced into retirement around the age of fifty. Unless a worker was promoted to an executive role, it was expected that he would take retirement without making a fuss. Partly this was because older workers earn higher salaries than younger ones, but age hierarchy was also an issue. In Korea, one is expected to show respect to one’s elders. It is very uncomfortable for all concerned when a forty-five-year-old boss has to deal with a fifty-five-year-old subordinate. There was even an expression that crystallized the company point of view: “oryukdo” is a contraction of the Korean words that mean, “If you’re here in your fifties or sixties, you’re a thief.” Forced early retirement still exists, and as a result there are many middle-aged and old men scraping a living driving taxis, operating small convenience stores, or working as security guards.
The IMF Era
Despite the introduction of democracy in 1987 and the flowering of trade union activity that this political change allowed, South Korean work culture remained essentially unchanged into the 1990s. Hours were still long—from 1991 to 1996, Koreans worked almost 48 hours per week on average, only 3 hours less than in the early 1970s—and again, this figure is very likely to underestimate the real number of hours put in. Corporate culture, particularly at chaebol, could be said to have become even more paternalistic. Under pressure from the newly emboldened unions, the largest firms began offering generous benefits rather than higher salaries, such as life insurance and help with children’s tuition expenses.
The family illusion was about to be shattered, though. Over the years, the chaebol had loaded up on debt in order to fund expansion into as many industries as possible. Reliance on debt had been a fundamental part of the chaebol system since the 1960s and had been fully encouraged by successive governments. Throughout the mid-1990s, borrowing in foreign currencies—particularly the U.S. dollar—also increased dramatically, from $89.5 billion in 1994 to $174.9 billion in 1997. Furthermore, the government effectively encouraged short-term borrowing of foreign currencies by demanding detailed disclosure of how long-term borrowings would be used. Korean companies were therefore taking on short-term debt in foreign currencies to finance long-term projects.
Throughout 1997, successive chaebol began to totter under the weight of their obligations. The debt-to-equity ratio of the average chaebol was 519 percent, far out of line with any reasonable yardstick. In January 1997, iron and steel maker Hanbo—then the fourteenth-largest chaebol—collapsed, owing US$6 billion. By November, seven of the thirty largest chaebol were insolvent, including Kia Motors. Smaller firms that relied on orders from chaebol fell into trouble, and the unemployment rate started rising. Meanwhile, foreign investors began pulling out of Korea, provoking heavy selling of the won. The value of the currency plummeted from 800 per U.S. dollar to 1700. This meant that the cost of repaying short-term foreign debt in Korean won more than doubled, further exacerbating the problem.
The result of all this was the bankruptcy of flagship names such as Kia, which ended up in the hands of Hyundai Motor, and third-largest chaebol Daewoo, which had attempted to ride out the crisis by expanding even further. Unemployment rose from just 2.2 percent to 7.9 percent between 1996 and 1998. By the standards of Europe or the United States, 7.9 percent may still sound like a reasonable figure, but South Koreans had become accustomed to near-full employment before 1997.
A survey by the FKTU at the time showed that among the unemployed, 81 percent blamed politicians for the crisis, and 67 percent felt the chaebol were also responsible. A mere 16 percent blamed the International Monetary Fund. The IMF “bailed out” Korea with a US$58.3 billion aid package, but in return it imposed its customary “shock therapy” conditions: short term interest rates, for example, were raised dramatically, surpassing 30 percent by December 1997. This caused further bankruptcies through 1998. The period of 1997 to 1998 has become known as the IMF era by Koreans, but despite a belief among many foreign businesspeople that Koreans blame the IMF for causing the crisis, the majority does take the view that the root cause of the problem was the government-chaebol compact, which had bred an addiction to debt and reckless expansion.
Though South Koreans worked long hours and faced enforced early retirement, there had at been least a tacit understanding that by joining a Korean firm, one would have a long, stable career. That changed in the wake of 1997. The implicit contract of job security was gone. Even Hyundai, which, more than any other chaebol, inculcated its workers to believe in the company-as-family mindset, was not immune to layoffs. Between January and September 2008, 10 percent of workers at the five largest chaebol were made redundant.
The crisis of 1997–1998 had wide-ranging implications for Korean society and the economy. As well as undermining the bond of trust between company and worker, it increased inequality. In 1999, a survey by Hyundai Research Institute showed that 44.6 percent of Koreans felt “middle class,” but a further 19.7 percent said that they had fallen out of the middle class due to the crisis. Between 1997 and 1998, the bottom 20 percent of earners lost 17.2 percent of their income, while the top 20 percent only lost 0.8 percent of theirs. Furthermore, Seoul’s homeless population of 2,500 shot up to 6,000, domestic crime (i.e. spousal abuse) rose by 46 percent, and divorce rose by 34.5 percent, all in that one year. A source of historic shame to Koreans, the overseas adoption of Korean babies registered its first increase since 1987.
The Decline of Loyalty, and Other Changes
Even in the post-IMF era, firms still attempt to instill loyalty in their employees. At some firms, new recruits fresh out of university are sent on four-week-long training programs, in which they are woken up early, made to participate in physical exercises, indoctrinated with the company’s values, and sing the company song. LG’s program is reportedly run by former military personnel. The recruitment process itself is designed to make would-be employees value the company: Samsung, for instance, runs its own “Samsung SAT” exam; this contributes to the belief that Samsung employees are smarter than the average Korean.
Such efforts are not as effective as they used to be. One Hyundai Capital employee says, “Some of our staff are loyal, but not me. In fact I’m grateful to those loyal guys, because it means less competition for me if I apply for other jobs.” He is not alone: a recruitment agency, Job Korea, found that 70 percent of Korean workers would now switch employers if given a better offer; only 12 percent of men and 4.6 percent of women stated they were “truly loyal” to their firm. This would have been imaginable in 1980 or 1990.
Another survey by TNS in 2003 showed that Korean employees were in fact the second most disloyal out of a cohort of thirty-five different industrialized countries. At the time, this was taken as a surprise, as Korean workers were still perceived to be company loyalists. According to the survey, women and older male employees were especially disloyal. This is because Korean firms still discriminate against both these groups. In 2010, the top chaebol hired three men for every woman through their entry-level recruitment programs, and the gender pay gap in Korea is 35 percent, the highest in the OECD. Older employees are still put out to pasture too soon.
Another factor in declining loyalty is the use of temporary contracts by employers. This trend began in the aftermath of the 1997–1998 crisis but picked up pace throughout the 2000s. In 2001, 16.6 percent of Korean workers were on temporary contracts, but by 2006, this figure had increased to 28.8 percent. As of 2012, around one in three Korean workers is a temporary employee, intern, or part-timer. Such workers have fewer legal rights, and so companies have found this type of hiring to be a useful way of gaining the upper hand over labor. Yet, as a consequence of this practice, workers worried about job security may outwardly proclaim loyalty to their employers but inwardly will harbor resentment and readily switch jobs when a better alternative becomes available. Only 48 percent of Koreans would recommend their employer as a place to work, compared to 75 percent of employees worldwide, according to TNS.
It is commonly believed by foreign businesspeople that South Korea has inflexible labor markets and that it is thus difficult to “hire and fire” as one wishes, but this is an incorrect perception, especially in the era of the temporary contract. The OECD ranked South Korea thirteenth out of its thirty member states in terms of employment flexibility in 2008. The belief that Korea’s labor market is rigid comes mainly from the strength of unions at particular companies, such as Hyundai Motor, and the umbrella union covering Korea’s bank workers. In 2011, the Hyundai Motor Union even tried to win a concession from management that the children of current workers be given extra consideration in the recruitment process. This kind of zero-sum demand—one that will hinder other applicants—is emblematic of the two-tier labor system that has come into being since 1997. Those with long-term work contracts at highly profitable companies like Hyundai Motor are extremely well protected; meanwhile, the rest of the workforce faces poor job security.
The Korean office is changing in other ways. Thanks not to a cultural change but to a legal one, the length of the average workweek is falling. In 2004, the Roh Moo-hyun administration introduced a 40-hour maximum, 5-day workweek, with a maximum of 12 hours paid overtime. This is mandatory for companies with 1,000 or more employees. In reality, it is not strictly adhered to: Koreans still put in a 44-hour basic workweek (plus many hours of uncounted, unpaid overtime), but at least the average is falling. Company drinking parties are also becoming less common than they used to be. “We used to go out twice a week and get really drunk, but these days, we go out once, and maybe just have a few beers,” says one bank worker.
The increasing numbers of foreign firms with Seoul offices is changing to the way some Koreans work. In particular, foreign firms are taking advantage of the chaebol’s apparent lack of interest in hiring women by taking their pick of most well-qualified women they can find. U.S. investment bank Goldman Sachs’ Seoul office contains more women than men. Executives there say it has always been easier for them to hire a talented woman than a talented man, as there is less competition from chaebol and major Korean banks.
Yoon Jeong-eun, a thirty-four-year-old woman, has built a career in PR entirely at foreign firms. She is now the lead PR director of the Seoul office of a multinational consumer products firm. Given her age and gender, she would never have achieved this had she remained entirely within local companies. She has subordinates ten years older than herself. One forty-four-year old male PR manager, she notes, is bitter about having a young, female boss but has to accept the situation. Miss Yoon has been promoted rapidly due to her ability, and because of flatter organizational hierarchies (which means fewer levels and job titles to pass through), she has reached the top at a young age.
At major Korean firms, age-based promotion through a long list of job titles still largely prevails. However, with the dawn of the Internet economy, a new breed of Korean firm is rising. For instance, online game maker Nexon, which is valued at US$6 billion, had (as of 2012) no director above the age of forty-four, and a thirty-four-year-old chief financial officer. From roughly 2010 onwards, South Korea has been going through a venture capital-led Internet and technology boom pioneered by entrepreneurs in their twenties and thirties. In some sectors of the economy at least, the traditional importance attached to age and hierarchy is beginning to break down.