Saturday, March 18, 2006

Jobs tomorrow
The Economist

Inequity has come to characterize South Korea today. The inequities run between the successful chaebols, and struggling small businesses, between prosperous Seoul and the neglected regions, between workers in the large enterprises who earn sizeable salaries, and those in the smaller firms that earn a fraction of what their counterparts in the large firms earn. While the rapid growth of China has been a boon for large Korean firms such as Samsung, it has spelled disaster for smaller South Korean firms. It is estimated that almost a half of the country’s small and medium size businesses make no operating profits, and many of them exist today solely because of government credit guarantees.

In such a grim scenario, the new proposed Free Trade Agreement (FTA) with the US holds considerable hope for South Korea. It is estimated that the FTA could increase GDP by as much as 2% and create some 100,000 jobs. The author believes that such an agreement would also strengthen South Korea's political relations with the US, and provide a "counterweight to China's growing economic influence." Additionally, the FTA is likely to speed up "reforms to recalcitrant parts of the economy. " Of course, such a proposed deal is not without significant opposition, primarily from farmers, industrial groupings, and trade unions.

As the author puts it "[i]t looks a tricky course, with distant fairways and lightning-quick greens. "

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