What Europe, and Canada, can really learn from South Korea
June 24, 2012 3 Comments
Riots, soaring unemployment, and entire countries on the edge of economic meltdown. It has left the world wondering how it all went so disastrously wrong for Europe.
Some have zeroed in on the careless expansion of a single European currency to countries that were neither as well developed economically nor as prudently governed as the founding members.
Others, such as columnist Fabrice Taylor, have focused on the image of European largesse.
“Europe is pathetic,” Taylor wrote in a recent article. Europeans, he wrote, “hit the cafés for a long lunch and then again at 5, on the way home. They whine, go on strike and riot in the streets when their precious entitlements are taken away.”
Taylor contrasts Europe to South Korea. “Wealth and prosperity are everywhere, and the people are happy. The unemployment rate in the country is about five per cent. Real productivity makes Europe’s look laughable (except for maybe Germany’s).”
He continues: “Workers get off at 6 p.m. and get half the holidays westerners get. Middle managers and senior people fill the restaurants at around 7 p.m. They eat, drink, laugh a lot, then go back to the office.”
Though Taylor is a journalist and analyst, his argument is severely undermined by basic flaws, such as the claim that Seoul is “a city of 30 million people”, or that South Korean productivity compares favourably with the more affluent European countries.
For the record, Seoul is a city of just under 10 million people, rising to more than 23 million across the official metropolitan area, which extends up to 80 kilometres from the city centre.
Relative to Europe, South Korea’s per capita GDP in 2011 would place it between Spain and Slovenia, while economic output per hour worked puts South Korea roughly on par with Turkey and the Czech Republic.
South Koreans are allowed 15 working days annual leave per year, somewhat higher than Canada’s 10-day allowance.
While South Korean workers averaged nearly 2,200 hours on the job in 2011, working hours have been on a downward trend since 2000, when the average South Korean worker spent 2,500 hours on the job.
Contrary to popular belief, this does not mean that South Koreans are becoming less productive. Quite the opposite.
As working hours fell, South Korean labour productivity soared. By 2011, output per hour worked was 26 percent higher than it was back in 2005, and 55 percent higher than it was in 2000, just before South Koreans started cutting back their working hours.
Increasing productivity has been the key to South Korea’s success. But how did they do it — and what can places like Canada and Europe learn from it?
One of the most important things the South Koreans did was to make education a deeply engrained part of the national culture — some commentators going as far as to say that the country has come down with a case of “education fever”.
In 2009, 63 percent of South Korean 25-34 year olds had completed post-secondary education according to the OECD — slightly higher than Canada’s 56 percent.
In Greece, by comparison, only 29 percent of 25-34 year olds had completed post-secondary education. Yet Greece’s efforts to educate the young were positively Olympian compared to Italy and Portugal, where fewer than one-in-four 25-34 year olds had completed any form of post-secondary education. (Spain was much better, at 38 percent, and Ireland better still at 48 percent).
South Korea grasped that economic growth depends on a skilled workforce — a point seemingly lost on parts of Europe (not to mention a former U.S. presidential candidate who likened post-secondary education to indoctrination).
South Korea’s government isn’t the cleanest in the world — it ranks 43rd overall for freedom from corruption, just behind Poland — but it’s a safer place to invest and do business than corruption-soaked China. It’s also considerably less corrupt than Greece (which is as corrupt as El Salvador and Colombia) and Italy (which is on par with Ghana).
Finally, research and development is big business in South Korea.
As a percentage of its economy, in 2010 South Korea spent more than twice as much as Spain or Portugal on research and development, and three times as much as Italy. By the same measure, South Korea also spent twice as much as Canada. This makes South Korea a major source of innovation.
Nevertheless, even South Korea has challenges to deal with. Only about two-thirds of South Korean 15-64 year olds are in the labour force, far behind Canada and “pathetic” northern Europe, where labour force participation rates are in the high-seventy and low-eighty percent range.
Far more South Koreans will need to enter the labour force if the country is to provide for its rapidly aging population while continuing its “no immigrants, please” policy.
Despite these challenges, South Korea moved up in the world by embracing education and science, and moving gradually toward a more open and honest system of government. Europe and Canada can do the same — without having to give up vacations or having to spend evenings at the office.