Hands to Work

The Asian Financial Crisis in 1997 shook East Asia to its core, starting in Thailand and spreading throughout nations like the Philippines, China, and South Korea. In Korea, the crisis – generally referred to as the IMF crisis –still remains vivid in living memory. IMF not only revealed the weakness of the Korean economy but also warned the nation against irresponsible foreign investments. In the 21st century, it stands as an example of a crisis that was averted by the combined efforts of the Korean people, fostering national pride.

However, aside from being a social phenomenon, the IMF crisis also had deep-reaching financial consequences. In the 1980s and 1990s, Korea had been experiencing a large degree of wage compression, meaning that the wages of low-skill and high-skill workers moved towards each other. However, in the late 1990s, the labor demand shifted towards educated labour as the economic crash diminished demand in sectors that required physical work. The literature shows that the unemployment duration increased among the least-educated workers from 1997 to 1999. Overall, the Financial Crisis in Korea had the effect of reducing demand for low-skilled workers or those with no more than a high school diploma.

Over the years, the narrow-sighted focus on education and high-skill labour became increasingly prevalent, with Korean society becoming geared towards accommodating high-level education. As a result, wages for white-collar workers began to rise and blue-collar workers suffered, establishing the idea of the educated elite as the sole model for acceptable citizenship. The financial and social consequences combined bred contempt for low-skill labour and uneducated workers in general.

In 2024, the effects of such artificial class divisions within Korean society are beginning to have their negative effects. In 2023 and 2024, unemployment greatly increased and job growth slowed. The job loss was especially pronounced among those in their 20s (i.e. those who had just received their college diplomas), with youths losing 124,000 jobs. In terms of the job sector, blue-collar jobs were most severely affected. Construction suffered from the largest sectoral job loss since 2013, losing 49,000 jobs in one year. Retail & Wholesale matched Construction, losing 61,000 jobs, while Manufacturing also reduced its workforce by 6,000 jobs.

This financial catastrophe, while having no discernible short-term causes, can be easily explained when looking back at the change in societal perceptions after IMF. Due to the focus on education, the job market after IMF can be said to have fractured, splitting into the more ‘desirable’ high-skill, high-education industries (working office jobs, employees of large companies and conglomerates, etc.) and the more ‘undesirable’ blue-collar jobs that require less education. The lack of desirability contributes to the discrimination against these types of jobs, as those who went into markets commonly seen as undesirable are seen as having ‘failed’ in the more desirable markets. While this may seem like a natural or even acceptable progression that would lead to social improvement, the truth is that such uncompromising shifts in the job market are detrimental to the economy.

No matter the perceptions of the general populace, the basic facts that an economy requires manual labour and manufacturing do not change. The white-collar workers who work at the forefront of the job industry in the AI or technology market depend upon blue-collar manufacturing and factory work to keep their industry stable. The daily runnings of an entire nation depend on production and service for the nutrition and comfort of all its citizens, both of which are blue-collar sectors. Further, South Korea’s core industries include manufacturing, shipbuilding, and chemical refinery, all of which are directly dependent on manual labour. Given that many industries foundational to economies rely on blue-collar workers, it is understandable that blue-collar jobs are among the most supplied jobs in South Korea.

Unfortunately, the Korean bias that manual labour is somehow unworthy is starving these industries of their workers. This impacts the economy in two key ways. Firstly, it reduces the size of the economy by destabilising its basis. Since core Korean industries as defined above are fundamentally based on blue-collar jobs, reducing the ability of these jobs to function properly leads to the economy shrinking. Secondly, it increases unemployment in the youths, as shown by the 2024 statistics. When society orients adolescents into seeking high-skill white-collar jobs, they neglect to mention that market demands are not necessarily going to be greatest in those sectors. The saturation of white-collar jobs leads to unnecessary and intense competition which results in high rates of unemployment and general unhappiness amongst the youth, while simultaneously hurting the blue-collar sectors. A paradox of the fractured market is that the youths are ignorant of the fact that due to the saturation of white-collar markets and high demand for blue-collar jobs, blue-collar wages are actually beginning to rise. It would seem to benefit all layers of society if it were to acknowledge and embrace the sacrifice and skill of blue-collar workers.

Therefore, Korea’s current economic predicament is not a purely fiscal issue, but a social one as well. Korean society must stop its hellbent pursuit of jobs that require high-level education and turn its eyes to its real economic needs. The undue emphasis placed on intense competition and office jobs is breeding unhappiness and a decline in health, not only for the individual but of South Korea.