Division and the economy

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Division and the economy

Last year, I wrote an article titled “Fearing permanent division.” The leaders of South and North Korea had planned a summit meeting at the beginning of 2015 in time for the 70th anniversary of Korea’s liberation and division. After eagerly waiting for seven months, I wrote the column out of frustration that no progress had been made. Regrettably, a few days after publication, the land mine incident occurred. Despite escalating tensions, the two sides reached an agreement on Aug. 25. Seoul and Pyongyang seemed to be seeking new relations.
But the sweet expectations were short-lived. Seoul and Pyongyang met in December, but the meeting ended without any agreement after two days. The stalemate continues, and North Korea conducted its fourth nuclear test and a long-range missile launch, pushing the sides even further apart. As the Kaesong Industrial Complex, the last remaining symbol of inter-Korean cooperation, was shut down, division has become permanent.

Emotional fights also make the situation irreversible. North Korea has criticized President Park Geun-hye harshly, and President Park referred to Kim Jong-un without his title at a Blue House secretary meeting.

I was so worried about permanent division because Korea may lose its last remaining growth engine. Resolving the youth unemployment issue is also included. While youth unemployment is not caused by division, when we don’t have a proper exit strategy, improvements in inter-Korean relations can be an option. Many Korean companies are considering North Korea as a new market as the Chinese economy is slowing down and oil prices are dropping. Especially the construction industry is keen, as the overseas construction market is sluggish. If the construction industry leads the “reunification jackpot,” the youth unemployment problem could see a breakthrough.

Last month, the youth unemployment rate soared to a historic high. Youth unemployment has become a chronic disease of Korean society. All the fancy plans the government announced had little impact because there were not quality jobs. In the first half of the year, new hires of college graduates by large corporations decreased by 4.8 percent compared to last year. As the situation is aggravating, politicians and businesses are blaming one another.

While we are barely hanging on, problems could grow in the future. If we fail to get out of the prolonged growth slump, the situation could get worse. Young people are struggling, and it is also hard on their parents.

Permanent division is an unfavorable factor for growth. But there seems to be no way to prevent it as Seoul and Pyongyang remain at odds. The problem is who suffers the most. The young people will feel the pain sooner or later, and the number will only grow. I am afraid that my concerns will come true.

JoongAng Ilbo, March 21, Page 34

*The author is a researcher at the Unification Research Institute, JoongAng Ilbo.

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