[INSIGHT]The holy grail is out there

Won Jong-wook, Baek Hwa-jong, and Kim Tae-wan, researchers at the Korea Institute for Health and Social Affairs, have published a remarkable report.
Their research traced through pension premiums how the life of workers, aged 45 to 50 at the time, has changed over five years since they quit their jobs under the tight circumstances of the International Monetary Fund’s stewardship of the economy in 1998.
There were 172,528 new retirees in 1998. Among them, the researchers reported, 40 percent had returned to jobs as of last year, 37 percent joined the local pension system, but 24 percent do not have any pensions. Of those who joined the local pension system, 40 percent were exempted from paying premiums because they had no income. Of those who retired during the foreign exchange crisis, 39 percent became so poor that they could not pay the premiums. It is also reported that those who moved to other jobs saw their income increase by only 70,000 won ($60) per month and most of those who joined the local pension system saw their income decrease by more than 1 million won per month.
We can infer a surprising fact from this report that these people, who may have been the backbone of the middle class in Korean society, have fallen from the middle to the lower class over the past five years. The “Social Statistics Survey for 2003” by the National Statistics Office also shows that those who said they belonged to the middle class were 56 percent of all respondents, a drop from 60 percent 10 years ago. Those who believed their social and economic status could be enhanced if they worked harder dropped to 33 percent, down from 46 percent 10 years ago.
Those who thought the gap between the rich and the poor had not narrowed were 80 percent of respondents, up 14 percentage points from the figure during the financial crisis. Moreover, 53 percent of the people thought bad politics or a bad social system was responsible for their poverty. These views show that we have not yet overcome the financial crisis of 1998. On the contrary, we are sinking deeper into the mire of recession and uncertainty.
The social indicators of the polarization between the rich and the poor and the fall of the middle class are danger signals for our society. The discontent and resistance of the lower class in our society were expressed in the presidential election, the presidential impeachment and the legislative elections. But the mainstream of our society seems to have been unaware of or to have ignored these changes at the grass roots. What should we do now that we know the truth, albeit belatedly? Fortunately, the portion of public opinion that says we should solve the problem by economic growth rather than income distribution is still high, at 61 percent. The desire is strong among people that we should improve our social status by making the pie bigger rather than sharing a small pie.
The driving forces for growth are large companies. Their job creation and investments are urgently required. For them to do so, the government should not put shackles on them. The president should come forward resolutely to free them from the chains of the past.
The ambitious work of the Roh administration is the “10 largest growth engine” projects. All the projects, including the development of information technology, biotechnology, intelligent robots and semiconductors, are impossible if large companies do not take the initiative in investing in the projects and carrying them out. They require large investments and manpower.
The president cannot call for huge investments while most presidents of large businesses stand at the threshold of prison. He should let them clean up the problems arising from past practices through prompt legal action and preventive measures against recurrence, so that they can devote themselves to their businesses with renewed determination. When the president draws up strategies for new projects together with the heads of businesses and drives, encourages and supports them, investment and jobs can be created.
Also, I suggest that the “four-group, two-shift” system adopted by Yuhan-Kimberly be expanded to other leading companies. The Gunpo plant of Yuhan-Kimberly divided all of its employees into four groups and had them work 12 hours for four days during the day, take four days off including a day for training, work 12 hours for four days at night, and take four days off. Compared to other companies with a three-shift system, that requires 25 percent more employees. But since the company introduced the four-group, two-shift system in 1993, its sales have increased 112 percent, from 332.3 billion won in 1996 to 703.6 billion won last year. It saw growth of 528 percent in net profits, from 14.4 billion won to 90.4 billion won.
The holy grail of labor-management coexistence has been achie-ved by its president, Moon Kook-hyun. The change from the conventional way of just cutting back on employees and labor costs to a lifelong educational system, in which employees constantly learn and digest rapidly changing technology, is the essence of how he found the pot of gold at the end of the rainbow. If we do not just talk about it as a myth but expand the system by more thoroughly studying and adapting it to similar conditions at businesses, it would be an epoch-making turning point for increasing the middle class by 25 percent.
The backbone of capitalistic society is the middle class. When the middle class survives, capitalism can survive, and when it grows bigger, a society can be prosperous. Instead of engaging in useless ideological controversies or making futile slogans about reform, the government, businesses and politicians should seek specific and effective ways to save the collapsing middle class and create jobs. If the middle class falls, the government and the country collapse.

* The writer is the executive editor of the JoongAng Ilbo.

by Kwon Young-bin