KOREA-WIDE EVENTS

DOMESTIC EVENTS

January 2006

Ideological trends were measured on a scale of -50 to 50, where -50 was the most progressive and 50 the most conservative, by averaging out responses to questions in each sector. The pendulum swung from 4.1 in 2002 to its most left-wing in 2003 with 1.8, easing to 1.9 in 2004 and 2.9 points this year.

?Politics
In terms of politics alone, the swing was more marked, going from 12.7 points in 2003 to 14.7 points in 2006. It was clearer still in response to key individual questions, with 76.6 percent of respondents condemning unconditional support of North Korea, up from 67.4 percent three years ago. Conservative views were also reflected by the 62.1 percent who agreed that the two Koreas should only reunify in a free market economy and the 56.3 percent who want to keep the decades-old National Security Law intact.

?Society
On social issues, where views remained progressive, they also moved closer to the center, from -2.1 points in 2003 to -0.7 points this year. Conservative views predominated on issues like seniority, where 65.5 percent approved of deference even if the age difference is small and 52.5 percent said freedom of choice should be tempered with care not to embarrass one’s elder family members. Some 53.8 percent disapproved of premarital sex unless it is somewhere along the road to marriage.

?Economics
Popular opinion on the economy bucked the trend, shifting back further to the left of the spectrum. The overall index stood at -2.5 points in 2002, -5.2 points in 2003, -4.9 points in 2004 and -5.2 points in 2006.

Land ownership turned the biggest proportion of respondents into progressives, with 64.5 percent agreeing that there should be a ceiling on how much land one person can own to prevent ownership from being concentrated in the hands of a few. The majority also agreed that poverty originates from poor policies and social institutions (56.9 percent) and that workers are ill-treated by employers (59.7 percent).

But 55.4 percent took the conservative position that the government should emphasize growth over equal distribution, and while 36.4 percent agreed that public welfare should be improved with higher taxes, 49.6 percent gave a resounding no. (Source: Chosun Ilbo.)

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NSO Statistics: Divorce Falls, Remarriage Rises, Rice Consumption Drops & NSO Population Census Results (Jan 2006) NSO Statistics Fewer Korean couples got divorced in 2004 than the previous year for the first time in 17 years, while the number of marriages increased. The number of divorces amounted to 139,365 in 2004, down 16.6 percent from the previous year, according to a report of social indicators by the National Statistical Office (NSO) on 6 Jan 2006. The number of divorces revealed a steep increase from 42,116 in 1988. The NSO attributed the year-on-year decrease of divorces to an increased number of marriages, and improved institutional measures such as counseling services.

The number of marriages rose 2 percent to 310,944 in 2004, the first rebound in eight years. The number of remarriages also increased, up 16.1 percent to 44,355 in 2004. The average marrying age rose in 2004. For men the age was 30.6 years old, an increase of 0.5 years in 2004, while the average for women was 27.5 years, up 0.2 years.


NSO Statistics (Jan 2006) (Korea Times)

With young adults increasingly delaying their marriages, the average age of women delivering their first babies rose 2.5 years to 28.9 years old from 1994.

The report also showed that those aged between 15 and 64 years olds whom 100 Koreans have to financially support reached 12.6 persons last year from 12.1 persons the previous year. The number of elderly citizens aged over 65 amounted to 4.38 million at the end of 2005, accounting for 9.1 percent of the total Korean population. The population 65 years old and older rose constantly from 7.2 percent in 2000 to 7.9 percent in 2002, 8.7 percent in 2004 and to 9.1 percent.

On the other hand, the ratio of the productive population aged between 15 and 64, is stagnating at 71.8 percent. The ratio stood at 71.6 percent in 2000. The ratio of youth population, aged 14 and below, fell to 19.1 percent in 2005 from 21.1 percent in 2000. Following the changes, the economically inactive aged-to-productive population ratio rose to 12.6 percent in 2005, up 0.5 percentage point from a year earlier. The ratio rose 6.9 percentage points from 1970. The ratio means that every 100 people 15-64 years old has to financially support 12.6 elderly citizens aged 65 years old and older. The economic activities of senior citizens 55 year old and older increased at the same time. The number in that age bracket totaled 3.86 million, accounting for 16.9 percent of the newly employed in 2005. (NOTE: Another change in the demographics is the increasing reluctance of seniors to reside with their children. This has affected societal changes in inheritance and savings programs for retirement. There has also been a growing trend to target seniors with the building of "silver towns" in the satellite cities of Seoul.)

Meanwhile, largely due to aggravated financial conditions from prolonged economic doldrums, the number of reported crimes rose 3.8 percent to 2.08 million cases in 2004. The figure translates into 4,328 reported crimes per 100,000 people on average.

Amid a prolonged economic slump, more than 560,000 jobless South Koreans asked the government to give them unemployment compensation last year, the Labor Ministry said. The figure of 565,753 in 2005 was an all-time high and a 20 percent increase from 471,542 the preceding year. (NOTE: South Korea's top 10 business groups are expected to employ a combined 23,700 people in 2006, up 2.4 percent from a year earlier, according to online portal, Incruit. Despite the slight increase in hiring, job seekers may find it harder to land jobs in the conglomerates due to a change in selection standards, Incruit said in Mar 2006.)

However, the number of civil servants has increased by 22,000 since the current administration assumed power. (NOTE: Counting privatized industry losses with additions to other state-run industries, the total approaches 40,000 new additions.) Faced with public protest, the government is now “reviewing” plans to increase their number by another 15,900 this year. W300 billion (US$300 million) will be needed in five years under laws that shorten the period required for the promotion of police officers. Government officials now say the promotion period of firefighters will also be cut so they can keep up with police, despite earlier assurances that this would be it. (Source: Chosun Ilbo.)

People also turned to liquor and cigarettes to relieve their stress from worsened economic conditions. Korean adults aged 19 and older consumed 88.2 liters of alcoholic beverage in 2004, up 2.6 percent from 2003. Per adult cigarette consumption, which declined from 7.8 cigarettes a day in 1994 to 5.6 cigarettes in 2002, rebounded to 5.7 cigarettes in 2003 and 6.2 cigarettes in 2004. (Source: Korea Times.)

NSO Population and Housing Census (Jan 2006) The National Statistical Office (NSO) has revealed the results of its 2005 Population and Housing Census. The first census was taken in 1925. The census is an important indicator of how Korean society has changed over time. Korea's last census was taken in 2000.

As of November, South Korea's population was 47.3 million. It was an increase of 2.4 percent from five years ago. The census found that 48.1 percent of the population live in metropolitan areas, such as Seoul, Incheon and Gyeonggi. The population in urban areas increased by 1.38 million, or 6.5 percent.

NSO official Oh Kab-won said he was worried that Korea's agricultural communities could collapse. "The exodus of the rural population to urban areas is negatively affecting the farming communities," he said. "Senior citizens are the ones being left behind."

The census showed dramatic changes in Korean society. For the first time in 35 years, there are more women than men. The female population is 23.63 million, an increase of 2.9 percent from 2000. There are 23.62 million men, a rise of 2 percent.

Experts say that the longer life expectancy of women is the reason behind the increase in the female population. The census also found that families are getting smaller. The average family consists of 2.9 individuals, down from 3.1 in 2000. Experts say that the nation's low birthrate is to blame. (Source: Korea Herald.)

According to the NSO, national per-capita rice consumption shrank 1.6 percent to 80.7 kilograms in 2005. Per-capita rice consumption decreased by 1.3 kilograms in 2005 from a year earlier largely because of a change in lifestyle that forced working Koreans to skip breakfasts or dine out. The average daily per-capita rice consumption stood at 221.2 grams last year, meaning that Koreans consumed less than two bowls of rice per day.

Korea's per-capita rice consumption has dropped significantly since 1990 when it reached 119.6 kilograms. The figure contracted constantly from 88.9 kilograms in 2001 to 87 kilograms in 2002, 83.2 kilograms in 2003 and 82 kilograms in 2004.Nevertheless, Korea still consumes more rice than Japan and Taiwan. The average Japanese consumes 61.9 kilograms of rice a year while the average Taiwanese consumes 61.9 kilograms. The constant decline in national rice consumption has increased the government’s concerns over the growing cost of managing mounting rice stockpiles bought from local farmers and rice exporting countries. (SITE NOTE: In 2005, the government ended the rice subsidies to "buy high-sell low" as a means of price controls. The protectionist practice was stopped because the rice warehouses were over-flowing with rice -- until the ROK government figured out that they could ship the rice north as humanitarian aid. Though the WTO agreement implementation was delayed, the current WTO agreement has forced the opening of the market and created more problems as the government did not shift the farmers to specialty crops or other produce. The on-going violent farmer protests are a result.)

However, the NSO said Korea’s consumption of vegetables and fruits has increased from previous years thanks to the rapid spread of healthy diets and lifestyles. The statistics also showed that Koreans skipped two meals per month on average because of busy work schedules or health and appearance reasons. Korean females aged between 20 and 29 years skipped five meals a month on average. (Source: Korea Times.)

South Korean household income rose 4.1 percent in 2005 from 2004, but its growth slowed from a 6 percent annual gain the previous year, a government report said on 7 Feb. The average monthly income of households stood at 2.92 million won (US$3,007) last year, compared with 2.81 million won a year earlier, according to the report by the National Statistical Office (NSO). (Source: Yonhap News.)

Miscellaneous Stats (Jan 2006) Overcrowded roads, jaywalkers and motorcyclists who use sidewalks as shortcuts make South Korea the most dangerous place to drive among 30 countries in the Organization for Economic Cooperation and Development, according to a report issued in late December. The data, gathered from 2003 statistics, showed 137 car accidents per 10,000 cars on the road. South Korea also ranked worst for number of vehicle accident deaths for the year; for every 100,000 people involved in vehicle accidents, 15 died. South Korea has topped the list since joining the organization in 1996, according to Lee Ui-yong, chief of the Traffic Accident Analysis Division with the Road Traffic Safety Authority. (Source: Stars and Stripes.) (SITE NOTE: In Jan 2006, the police launched a campaign to ticket motorists who use cell phones while driving. Like most Korean campaigns this will be short-lived.)

The number of cars registered in Korea hit 15.4 million in 2005, up 460,000 from the previous year, the Construction and Transportation Ministry. Of the total, passenger cars accounted for 94.5 percent, or 14.6 million, with vehicles for commercial and public services numbering 783,965 and 57,563 respectively. By region, the Seoul metropolitan area accounted for 46 percent of the total, and Gyeonggi province had 3.5 million registered vehicles, the largest number. (Source: Joongang Ilbo.)

A survey by a multinational consulting firm said Korea's opinion leaders have more faith in the media than in the government and prefer newspapers to other media. Edelman surveyed 2,000 opinion leaders in 11 nations, including 150 Koreans. Nearly three in 10 of the Koreans said they had strong faith in government pronouncements, a confidence level that was worse only in Germany and Brazil. Just under half the Koreans said they trusted their local media, ranking third behind China and Brazil. About a third of the Koreans surveyed said they trusted their newspapers, and somewhat surprisingly said they trusted Internet news (26 percent) more than television (22 percent). Korea was one of only five countries in which those surveyed trusted the Internet more than TV outlets. (Source: Joongang Ilbo.)

South Korea's spending on oil imports grew more than 40 percent in 2005 from a year earlier due to high crude oil prices and an increase in oil consumption. According to the report by the Bank of Korea and the Ministry of Finance and Economy, South Korea spent US$42.7 billion, up 42.8 percent from the previous year.

South Koreans spent an average of five hours a day online in 2005, more than double the amount of time three years earlier, indicating that the Internet has emerged as an important part of their daily lives. According to the poll of 3,275 people by the state-run Korea Information Society Development Institute (KISDI), Koreans spent 297 minutes in cyberspace on average in 2005, compared with 148 minutes in 2002. (Source: Yonhap News.)

Miscellaneous Stats (Sep 2006) According to the CIA factbook, South Korea is the 26th most populated country in the world, while its territory ranks 116th largest, and it comes in 7th in terms of oil imports and 8th in military spending, according to the updated World Factbook published by the Central Intelligence Agency (CIA). Updated on Sept. 7, the factbook says North Korea's population ranks 49th while its territorial area ranks 116th. The country has a higher birthrate (15.54 per 1,000), ranking 143rd, than South Korea (10 per 1,000), which comes in 202nd. North Korea's military expenditure is placed 22nd.

Countries whose information were not available were not included in the rankings list, so the total number of nations listed differ category by category.

In purchasing power parity, South Korea comes in 16th with US$965 billion, North Korea in 88th with $40 billion. The death rate in South Korea is 5.85 per 1,000, or 171st. It's 7.13 per 1,000 in North Korea, or 132nd. South Korea is the 13th largest electricity production country, with 342 billion kilowatt-hours (kWh). North Korea was not included in this category. In electricity consumption, South Korea ranks 13th at 321 billion kWh, while North Korea comes in 68th at 17.4 billion kWh. Neither of the Koreas are oil producing nations, but the South is 7th in consumption with 2.26 million barrels per day, and North Korea 42nd with 22,000 barrels. South Korea ranks 8th in military spending ($21 billion) based on year 2005 and North Korea 22nd ($5 billion) based on year 2002. (Source: Yonhap News.)

Aging Population accelerated as Birth Rate Falls (Dec 2006) The aging of South Korea's population accelerated notably in 2005 from five years earlier as the number of elderly people surged and the birthrate fell according to the NSO on 25 Dec. The number of the aged population grew at a much faster pace than the total population in 2000-2005, while the number of women aged 15-49 fell for the first time in the five-year period, the National Statistical Office said in its regular five-year report. In 2000, the elderly population were 3.37 percent of the population, but increased by 29.5 percent to 4.36 percent of the population in 2005.

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Birth Rate at All-time low (Jan-May 2006) The average family consists of 2.9 individuals, down from 3.1 in 2000. Experts say that the nation's low birthrate is to blame. (Source: Korea Herald.) This figure was later updated to 1.6 in 2004 in mid-2006.

Korea's major problem is that it now is considered a "non-viable" economy meaning that in the future, there will not be enough population to support the tax base. With the elderly is living longer, the younger population will be called upon to increase their share of welfare programs. Unfortunately, with the current birth rate, Korea cannot survive. Even now, the ROK is cutting their military forces starting in 2010 by 50,000 simply because it cannot maintain the manpower-heavy force -- with future reductions in the size of the inductee group. As a result the government has been forced to move to high-tech/low manpower intensive systems for its defense.

The country’s birthrate has dropped to the point where the average Korean woman is expected to have only one child throughout her life. The drop is the fastest in the world. If the trend continues, the population will drop some 8.69 million to 39.48 million by 2050, from 48.17 million as of 2005. A low birthrate is a serious social problem in many developed nations, but in most of them the rate has been slowly growing since 2001. The U.S. still has a birthrate of more than two, rising minutely from 2.034 in 2001 to 2.048 in 2004, while the U.K. saw births inch up from 1.63 to 1.74, France from 1.88 to 1.9 and Germany from 1.34 to 1.37 in the same period. (Source: Chosun Ilbo.)

The number of babies born in Seoul last year - 98,776 - was a record low since 1970 when the government began the nation's population tally. The number of newborn babies also dropped nearly 8 percent to 438,000 from a year ago, according to the statistical data. South Korea's fertility rate fell to a new record low in 2005 as more and more women engaged in economic activities and got married at older ages. The rate, or the average number of babies per woman of child-bearing age, was 1.08 in 2005, down from 1.16 in 2004, and the number of newborn babies fell by 38,000, or 7.9 percent, to 438,000, according to the National Statistical Office (NSO). (SITE NOTE: Korea has the world's highest abortion rate with some 350,000 terminations annually versus the birthrate with 438,000 births in 2005.)

Korea had the lowest birthrate of 1.16 in 2004, among the members of the Organization for Economic Cooperation and Development who have also been struggling with chronically low fertility rates. It is significantly lower than the 2.1 needed to maintain the current population level in the country. The fertility rate in Korea began to drop after the 1997-98 Asian financial crisis, which forced the nation to help out its economy with the International Monetary Fund. (SITE NOTE: Japan, though better than Korea, faces the same problem of falling birthrates and a non-viable society. Japan is doing slightly better than Korea with a birthrate of 1.29, but it still created the new post of a Cabinet secretary taking care of the low birthrate last year. It also introduced a “free birth” policy, whereby the government pays for all the costs of childbirth. As one of the Cabinet's most pressing tasks, the government has decided in May 2006 on a plan to dip into a public employment insurance account to fund new countermeasures to battle the declining birthrate -- hundreds of billions of yen -- without adhering to the conventional budget framework. (Source: Yomiuri Daily and Chosun Ilbo.)) (SITE NOTE: Japanese births rose for the first time in six years in 2006, according to government statistics announced on 1 Jan 2007, offering a glimmer of hope for a rapidly aging society. Despite the increase, the rate is still far below the 2.1 rate needed to keep the population steady.)

More women are participating in society -- with no desire to bear their own children certainly has added to the low birthrate. As a result, women are postponing the age when they want to start a family. There are a multitude of sociological factors, but a significant portion of women now consider NOT having children as a life-style choice. In addition, every year the marriage rates have been declining showing that the younger people are postponing marriage -- or even considering a single life-style as an alternative. (Source: Korea Herald.)

The low birth rate is partly a result of the increased age at which the average Korean woman marries, the statistics agency said. The average age at which a woman first married was 27.7 last year, compared with 24.8 in 1990. As a result, women in their early 30s represented 41 percent of those delivering babies in 2005, a larger proportion than women delivering in their late 20s for the first time on record.

Impacts to Education System As the nation faces a drastic drop in the birthrate, the number of kindergartners in Seoul hit an all-time low last year. The Seoul Metropolitan Office of Education said the number of children below age 5 who attend public and private kindergartens in Seoul hit a new low of 85,302 for the year ending April 2005. The number has gradually decreased over a decade and dropped by two percent from a year earlier. "The number of kindergartners is the lowest in history at least since 1991," said Oh Wan-sook, senior supervisor of the primary school division at the office. "Because there is a fewer number of babies born each year, there are fewer children to attend the kindergartens." There were 331,625 c+hildren who were eligible to attend kindergartens in 2004, a number which decreased by 20,000 in 2005.

The impacts have been increasing in recent years. Starting in about 1998, the elementary schools in the rural areas have been closing or consolidating because of falling student populations. This situation was created by a combination of young families moving away from the rural areas combined with the falling birth rates. For example, in 2000, Kumgak Elementary School outside Osan AB closed and the remaining students bused to Pokchang Elementary School. Similar problems have now started to appear in the rural area middle schools throughout the nation as declining populations force rural students to relocate to "boarding schools" away from their homes. Throughout the nation starting in 2000, the many middle schools started to close and now in 2006, the high schools are likewise being impacted by lowered student populations.


Now closed Kumgakri Elementary School

The impacts are projected out into the future and it is plain that by 2008 the numbers of colleges will exceed demand. As a result the government is planning to reduce the number of national colleges -- though the way it is going about it is suspect. The majority of universities are private schools and the government is trying to control them as well. Analysts advise that universities need to switch to a market-economy style of operation whereby demand will drive the educational system. Survival will be based upon those colleges whose educational standards are the highest -- and in most demand.

Nationwide Plan to Reverse Low Birthrates To tackle the low birthrate, the government plans to spend 2.3 trillion won this year; 3.4 trillion won in 2007, 3.9 trillion won in 2008, 4.6 trillion won in 2009 and 5 trillion won in 2010. The government has allocated a total of 9.8 trillion won over the next five years to help parents pay for childcare and education.

It will also spend 5.5 trillion won to build more state-run childcare facilities across the country and subsidize operations of private nurseries to better help working mothers. Infertile couples wanting to conceive via in vitro fertilization are expected to receive up to 3 million won for each trial by the end of 2010, while pregnant women will receive more comprehensive medical tests to detect any abnormality in a fetus. The government will also provide 643 billion won to help companies pay female employees who take maternity leave for 90 days by 2010, up from the current 30 days. ``The spending plan includes a comprehensive package of measures to encourage married couples to have more children,’’ said an official at the health and welfare ministry. (Source: Korea Times.)

Some cities are proposing programs in a desperate effort to do anything -- no matter how frivious. Considering that lower marriage rates are the main problem, the Seoul municipal government will hold a dating event on Feb. 8 which promises diverse support including free wedding hall rental for those who end up getting married. Single men and women residents of Seoul aged under 40 are eligible to apply at cafe.daum.net/lovetrains. (Source: Korea Herald.)

Rural Areas Hardest Hit The hardest hit by the falling birthrates is the rural communities. The problem is that there are fewer young people willing to reside in the rural areas. This has been a problem since the 1980s as young people moved to the cities to find better paying jobs, leaving their parents behind to run the farms. By the 1990s, it was said that the countryside was filled only with graves and old people waiting to get there.

Local administrators are desperate because the amount of financial support they get from the central government depends directly on the size of the population. Less money translates into fewer employees. If the population under a regional self-government is lower than 50,000, two departments should be shut down under central government regulations. If it falls below 30,000, they should get rid of another department.

If the population of larger cities stays lower than the standards set by the Ministry of Government Administration and Home Affairsby 10 percent or more for two consecutive years, their municipal governments should do away with a division. North Jeolla Province had to integrate two departments after its population fell below 2 million in 2004. South Jeolla Province also faces the same risk if its population does not go over 2 million this year.

Regional administrators are taking desperate moves to encourage childbirth as their budget largely depends on population size. Most municipal governments in rural areas offer between 200,000 won and 300,000 won to a resident couple who give birth to their first child. The city of Cheongju in North Chungcheong Province decided to provide incentives to couples who have been registered as residents for more than a year - 300,000 won for the first child, 500,000 won for the second child and 1 million won for the third child from July.

In South Gyeongsang Province, Haman County and Namhae County endow those who have their third child with 5 million won and 3 million won, respectively. However, even the nation"s highest level of incentives didn"t work as these rural areas lack people young enough to have children. (Source: Korea Herald.)

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South Kyongsang Province Plan for Mail Order Bride Support (Jan 2006) South Kyongsang province planned to start a trial program in which it will give 6 million won ($6,113) to male farmers who marry foreign women. South Korean farmers have been turning to brides from other parts of Asia in recent years after struggling to woo local women, who are often less than enthralled with the prospect of rural life. (NOTE: This is a problem that has been plaguing Korea since the 1990s when rural men were started importing Chinese ethnic-Korean brides -- many of whom ran away. Then Koreans started to marry other nationalities which ran against the mold of a homogeneous society -- and entailed a mass of changes in the laws to allow changes in status of the foreign spouses and children born to these women. The attitudes of Koreans have changed greatly over the years where more parents are willing to accept a foreign partner for their children. It has become a popular theme in movies as well.)

"Young men in the countryside have a hard time finding brides and they started to look elsewhere," said Ryu Kum-ju, an agricultural policy official for the province, located in the southern part of the country. The province also plans to increase courses for foreign brides to help them adjust to life in South Korea. The local government estimates it costs about 12 million won for a farmer to pay all the fees and travel required to find a bride overseas. The number of South Korean men who have married foreign women has rocketed in recent years. It hit 25,594 in 2004, more than double the 11,017 in 2002, according to data from the Korea National Statistical Office.

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Roh Administration Seeking to Find New Tax Funding (Jan-Feb 2006) To come up with a shortfall of 10.5 trillion, the government plans to reduce a set of tax exemptions given to salaried workers and companies, and find more taxable sources, including larger numbers of self-employed. It will also minimize future wage increases for civil servants and more efficiently implement state-funded infrastructure projects. The government is considering introducing an earned income tax credit (EITC) in 2007, a refundable tax credit for low-income working families to narrow the widening wealth gap between rich and poor. The system offers low-income salary workers tax credits to offsets their tax payments to subsidize their incomes.

At the same time, the government has a plan to close tax loopholes. The government plans to revise the income tax rules to jack up the taxpayers’ ratio to 70 percent of the tax base in the mid to long-term from the current 51 percent. The move is aimed at securing enough cash to cope with the rapid aging society and low fertility rate, two factors that are eroding Korea’s economic growth potential and refurnishing government the coffer due to a sagging tax base. The government also planned to close the loopholes in the inheritance and gift taxes that allowed people to bypass the system. (Source: Korea Times.)

Cigarette Tax Not Considered The Roh government has scratched its plan to raise tobacco prices by W500 (US$0.5) per pack in 2006. The ruling Uri Party spokesperson Oh Young-sik on 30 Dec 2005 that there was a consensus that it would not be appropriate to raise the price of cigarettes in 2006 considering the economic recession, adding that there would be no further discussion on cigarette price hikes for the time being.

The Government Administration and Home Affairs Committee already passed the revised bill of the Local Taxes Act that included a W131 increase on cigarette excise taxes in Dec 2005, but the Assembly passed the bill by deleting the article concerning the cigarette price increase in the plenary session on 30 Dec 2006. The government had presented a bill to raise the tobacco price by raising taxes on tobacco consumption and the public health promotion tax in order to discourage smoking -- but really because it is a "safe" revenue tax. (Source: Chosun Ilbo, 30 Dec 2005.) (SITE NOTE: The past cigarette tax increases were supposed to be used to fund the Roh administration's educational plans, but instead got sidetracked into the general budget and lost. The public remembers this and any new attempt to raise a "luxury tax" will turn the publicity against the Uri Party.)

Tax Breaks for Donations and Educational Programs More civic groups will be authorized to receive donations, to which the government grants tax breaks for amounts up to 10 percent of the donor's income.

Companies may become more prone to provide training programs for employees thanks to increased tax benefits for expenses they incur to implement sessions with the help of authorized educational institutions. (Source: Korea Herald)

Self-employed Targeted -- Primarily Lawyers On 1 Jan 2006, the Finance Ministry announced it was investigating new reporting procedures for "self-employed." The major aim is lawyers who are paid mostly in cash -- and do not declare this income. However, it was also found that more than half of the self-employed did not file any form of paperwork. This is normally because small self-employed (such as street vendors) do not earn enough to even make the paperwork filing worthwhile.

The Korean government decided to toughen the tax-collecting guidelines for self-employed Koreans this year, ordering all businesses with one or more employees to submit wage receipts to tax authorities. With this rule, the government can expect to receive wage records from all of the 1.1 million sole-proprietorship businesses with one or more workers that have been largely unaccountable for taxes until now. Those failing to comply should brace for an additional 2 percent tax, said the Finance Ministry while announcing revisions to local tax laws. Currently, about 1.1 million of self-employed operations are in business here.

Home Deductions Reduced Fewer tax benefits will be offered to Koreans with homes priced at 300 million won or more as they are no longer eligible for deductions on interest for savings accounts used to secure additional property even if their homes fall into the "small" category of 25.7 pyeong or less. (One pyeong equals 3.3 square meters.) These and other changes highlighted the government's latest tax law revisions that were the first to be implemented this year.

But due to the rising spending pressure stemming from a rapidly-aging population and a low birth rate, experts had expected the government to resort to cutting tax deductions. The scope of tax deduction will be reduced for income earned from abroad, while those residing permanently overseas must sell their Korean homes within two years after leaving to be eligible for tax breaks. Also, the benefits apply only in the cases of families that own a single residence in Korea. Multiple homeowners are denied exemptions regardless of when the transaction occurred.

Eliminating the incentives for keeping multiple homes has become one of the government's top priorities as it seeks to fight speculation with a newer, stronger law. (Source: Korea Herald)

Roh hints at Tax Increase The disturbing news was that President Roh hinted at a tax increase in his New Year's speech delivered on 18 Jan 2006 to combat what he declared as growing disparity between the haves and have-nots. Roh told the country, "In order to tackle the issue of wealth disparity by creating more jobs and building a better social safety net, and to gird for the future, we need more funding,"

He stressed that the nation had an "absolute shortage of funding." "We need to find a fundamental solution," he said, noting the nation's tax bite as a percentage of gross domestic products is 27 percent, much lower than that in other advanced nations. However, his critics point out that this "class polarization fight" has been part of his agenda since elected and he has done little of substance to alleviate the problems -- and only harps on it when it is politically expedient.


President Roh's New Year's Address (18 Jan 2006) (Korea Herald)

Outside of the Uri Party, no one is happy with the news. Some Uri lawmakers came up with an idea to broaden the income tax base as a possible source for increasing state revenue. "Presently, only about 50 percent of Koreans pay income tax, so expanding the income tax base is an viable option," said Uri Rep. Rhee Mok-hee.

The point that Roh was evading was that in 2006, the government faced a shortfall of 10.5 trillion won and Roh was trying save EXISTING programs -- such as the giveaways to the North that have already been committed while disguising it as a NEW national need such as birth-rate and social welfare for the elderly programs. ``While mapping out the long-term fiscal plans until 2030, we found that finances are absolutely deficient no matter how we improve the effectiveness of the public financing and fiscal spending structure. A fundamental solution to the problem must be found,'' Roh said.

Roh said the government aimed to create as many as 130,000 new jobs this year and plans to allocate 6 trillion won in the next three years on various vocational training programs to help people get jobs. The critics rebutted that the Roh administration is aiming at creating more public sector jobs -- not ones in private industry. Vocational training amounts to more teachers and schools -- not jobs in industry. The critics respond that economic packages aimed at assisting small and mid-sized companies is what is needed for long-term growth.

The main opposition Grand National Party, which insisted on an 8.9 trillion won cut in the 2006 government budget, criticized the ruling camp's move. (NOTE: The 2006 budbet was passed as is without the GNP presence and reduced only for programs already killed.) "Levying heavier taxes on the rich and returning the money to the poor in the form of welfare programs may work in the short term. But in the long run, it could have a disastrous impact on our economy," said GNP Rep. Lee Bang-ho.

The GNP party insists that a more corporate-friendly environment will ultimately fix the problem of social polarization. Rep. Lee Hahn-koo of the Grand National Party (GNP) said President Roh's remarks overlooked the huge disparity in fixed expense-to-income ratio of Korea and that of other developed economies. ``Even now, foreign firms remain reluctant to move into Korea, complaining that (Korea's) tax rate is higher than that of other rival countries and domestic firms are also seeking to relocate their facilities abroad,'' Lee said in a radio talk show. ``How can government create jobs and resolve economic polarization in the middle of such developments?'' Lee criticized Roh's remarks.

Roh thrusts tax rates to politics' fore

Aides say higher levies needed to fund ‘income gap' programs

January 20, 2006 -- Taxes are suddenly on everyone's mind after President Roh Moo-hyun Wednesday evening told the nation he is serious about rectifying the growing disparities in Koreans' incomes.

Political observers say the issue could play a role in the local elections at the end of May and perhaps linger on until the presidential election late next year. One of Mr. Roh's aides suggested that he intends to make it an issue in the next presidential campaign.

In his address to the nation, Mr. Roh said additional government revenue would be required to provide a better living for Koreans at the lower end of the income scale. He denounced calls for tax reductions by the conservative opposition, but he was not specific on how he planned to raise the money he says he needs.

Yesterday, Uri Party and administration officials said the answer was simple: tax increases are inevitable, and will be imposed step by step. One official added, "President Roh's speech was addressing the controversy over tax increases or decreases. Next year's presidential election will depend largely on this issue, because each candidate will have to present policies in this regard."

Presidential contenders in the governing and opposition parties were talking with reporters about the question yesterday. The Grand National Party's chairwoman, Park Geun-hye, said, "Hardly any country with bright prospects increases taxes." Seoul's mayor, Lee Myung-bak, a rival of Ms. Park for the party's 2007 nomination, said, "More tax money should be raised by spurring additional business profits, not by raising tax rates." The Gyeonggi province governor, Sohn Hak-kyu, joined the criticism. "Increasing taxes is just a superficial policy that ignores the essence of income disparity," he said. The Grand Nationals' chief policymaker, Lee Bang-ho, echoed his colleagues' calls for what he called a "growth-driven policy." He called a tax increase a palliative that would doom Korea to slow economic growth.

The chief policymaker of the smaller Democratic Party, Kim Hyo-seuk, agreed. "Before demanding that the public share the burden," he said, "the government must make efforts to reduce expenditures." One of the strong presidential contenders from Mr. Roh's Uri Party, Kim Geun-tae, went even further than the president. He criticized the shrinking of the middle class, supported Mr. Roh's efforts to reverse it, and then went on to call for a constitutional amendment that would put Korea's land in the public domain.

Business circles, not surprisingly, were unhappy, and their mood was not improved by an announcement by the National Tax Service that it would begin a series of audits of large companies suspected of tax evasion. The Korea Chamber of Commerce and Industry issued a statement calling for a dialogue with Mr. Roh on the issue. Others complained about Mr. Roh's call for better treatment of part-time and temporary workers.

One staff member at the Federation of Korean Industries said, "When he only stresses the responsibilities of companies, it will lead to more burdens on companies and in the longer run a decrease in business activity.

by Lee Soo-ho, Lee Chul-hee (Source: Joongang Ilbo.)

The government is currently conducting a study on long-term fiscal planning throughout 2030 and related tax reform plans. Experts predict that implementation of newly revised tax reform plans would ultimately result in increased tax burden. As the Ministry of Finance and Economy (MOFE) said earlier this month, the government's tax reform is forecast to focus on expanding the tax base and improving the equitableness of Korea's taxation system. The matter of concern and interest is on how the government's long-term tax reform scheme would affect the tax burden of the working classes in the low to middle income brackets.

It is probable that the government will first plunge its scalpel into income tax and value added tax to broaden its tax base as even a marginal hike in tax rate translates into huge additional tax revenue. In contrast, the government is unlikely to lift the corporate tax rate to avoid increasing the cost burden of Korean companies amid unfavorable external economic conditions such as high oil prices and protracted strong trend of the Korean currency. The government could once again draw up its card of instituting a new tax item aimed at raising funds required for coping with the low birth rate and the rapidly graying society.

``There are many ways to raise funds for the national coffer such as a tax rate hike, issuing of government bonds and redirecting tax evaders in the underground economy to return to the aboveground economy,'' said Rep. Rhee Mok-hee, chief of the Uri Party's policy committee for labor and environment. (SITE NOTE: These actions by the Uri Party and NTS are already underway.) ``President Roh only touched on the issue with the intention that the country should come up with the solution through public discussion as he must have thought that suggesting a direct method would bring about a great stir,'' Rhee advocated President Roh's position. (Source: Korea Times.)

Middle-class families: in danger but ignored

January 10, 2006 -- The turmoil of the 1997-98 financial crisis saw many middle-class families sink into lower-class wages and living conditions. These days, however, middle-class families are facing a fresh assault on their standard of living due to ongoing corporate restructuring and the soaring costs of housing and education.

But with the government preoccupied with improving the conditions of the working class, many in the middle class fear they are being overlooked.

"Greeting the new year, I hope politicians will take a greater interest in the situation of middle-class families," said Kim Ki-seop, 46, head of the product development team at the Industrial Bank of Korea. "It is not easy to make a good living."

Mr. Kim has worked at the bank for 17 years and now owns a 106-square-meter (126.5-square-yard) apartment in Ilsan, a new residential city northwest of Seoul. His annual salary has jumped by 7 million won ($7,160) this year because of his work team's successes last year.

Yet Mr. Kim does not feel financially safe. He is unsure that he can cover the soaring educational costs for his son in middle school and his daughter in elementary school. He is also concerned about his job. "I saw many friends my age being retired in the aftermath of the financial crisis," he said. "That might happen to me some day."

Like many of his peers, Mr. Kim is taking a course for a master's of business administration on weekends in anticipation of needing a new job.

The financial crisis hit white-collar workers especially hard. Of the 147 people who have applied since 2003 for training programs operated by the Korea Employers Federation, the Human Resources Development Service of Korea and DBM Korea, nearly 73 percent had been office workers or in the field of research and development.

Pressure on older workers to make room for younger people has grown as jobs have become scarce following the financial crisis. An oft-heard quip at local companies runs, "A man who remains in an office until the age of 56 has no shame."

"The administration is not making policies to help relieve middle-class concerns," Mr. Kim said. Many in the middle class feel that government policies aimed at helping those less well off often depict the middle and upper classes in a poor light, creating conflict between classes, experts said. Such attitudes won't help stabilize the nation's middle class, they said.

"Since the political influence of the middle class weakened, politicians have been busy attacking ‘vested interests,' without offering alternative proposals," said Lee Nae-young, professor of political science at Korea University.

"Most middle-class people are tired of ideological or class-based conflicts that have continued for two years under the Roh administration," said Kim Ho-ki, professor of sociology at Yonsei University.

Experts also said that the government must recognize that educational costs are the heaviest burden on middle-class households and should improve public educational services. "With the current administration's educational policies focusing on equality, they cannot meet middle-class people's demand for high-quality education," said Kwon Dae-bong, dean of Korea University's Graduate School of Education. "With the quality of public education deteriorating, more wealthy families will send their children abroad, which many middle-class families won't be able to afford. Accordingly, educational and economic inequality will worsen," Mr. Kwon said.

Economists are also urging the government to allow enough high-quality housing for middle-class families to be built. The Aug. 31 measures to curb real estate price hikes, they said, focused too much on reducing demand through taxation while neglecting to boost the supply.

"If the government loosens restrictions on reconstruction in southern Seoul, apartment prices there could rise in the short term but will stabilize as supply increases," said Kim Kwang-doo, professor of economics at Sogang University.

Other experts said government welfare programs will have to be reconsidered. "It is very dangerous to think that economic inequality can be solved only through welfare programs," said Keum Jae-ho, a research fellow at the Korea Labor Institute. "The government should focus its poverty relief programs on the aged and the disabled, while improving opportunities for other poor people by creating more jobs." In the Netherlands, irregular jobs with contracts of less than one year account for 40 percent of all jobs but few people complain, said Yoo Gyeong-joon, research fellow at the Korea Development Institute. "The government should focus on reducing discrimination against irregular workers rather than cutting irregular jobs. This would get more people in the workforce," he said.

by Special Reporting Team

About 20 education-related government agencies, including the Ministry of Education and Human Resources Development, unveiled yesterday the second round of a basic plan for national human resources development, which the government will drive forward by investing 51 trillion won from this year through 2010.

Early English education and change in the existing semester system proposed in the plan are attracting attention with a huge impact on society as a whole as well as the education sector.

Thanks to classes focusing on English starting from the third grade of elementary school and English-speaking programs accounting for more than half of all TV programs, 77 percent of Finland's population speaks English fluently. This is also an important factor of the country's national competitiveness which ranks top in the world.

Realizing the need for early English education in the global era, the Ministry of Education and Human Resources Development introduced English education starting from the third grade of elementary school in 1997. Currently, third and fourth graders take a 40-minute English class once a week, while fifth and sixth graders have classes twice a week.

However, some have repeatedly pointed out that beginning English education from the third grade in elementary school is too late and that it leads children to lose interest in English because most parents have their kids learn the language as kindergarteners through private education.

The ministry believes that English education in elementary school is effective and intends to expand it, but it will conduct a pilot education of first and second graders first because of potential side-effects.

In fact, about 30 percent of the country's elementary schools are teaching English to their first and second graders through extracurricular classes regardless of the regular English class for the third graders.

Also, the ministry is planning to deploy 2,900 English native assistant teachers to all middle schools by 2010 and conduct a pilot-base "English immersion education" which teaches mathematics and science in English in elementary, middle, and high schools in the Special Economic Zone and Jeju Free International City starting from 2008.In response to low birth rates, the aging society, and globalization, the ministry decided to establish a public forum for a reform of the school system in the first half of this year and devise a comprehensive plan to push ahead with the school system reform by 2007. It is planning to change the existing semester system which starts in March into a September semester system. (Source: Donga Ilbo.)

The Ministry also decided to make English the language of instruction for math and science in all elementary and secondary schools in the special economic zones of Incheon, Busan-Jinhae and Gwangyang and the free international city of Jeju.


3rd Grade of Younghoon Elementary School head on Vacation (Dec 2005)

According to the recent report, the number of students going overseas swelled to 16,446 in 2004 from 1,562 in 1998. A soaring number of elementary school students have gone abroad during the six-year period amid the boom in early English education with less legal restrictions. The number of elementary students studying overseas has snowballed from 212 in 1998 to 6,276 in 2004, marking a 30-fold rise. The sharp rise is a reflection of a soaring demand for early English learning.

At the same time there is soaring interest in English, it is part of the efforts by the Ministry of Education and Human Resources Development to put the brakes on accelerating costs for private tutoring for early English education. However, Korean children are spending more time and money in studying English to get good scores on the tests. The English proficiency tests targeting children include Primary English Level Test (PELT), TOEIC Bridge, Junior English Test (JET), and the Junior General Test of English Language Proficiency (JR G-TELP). According to statistics, the number of elementary school children who took one of the four major English proficiency tests has been sharply rising from 380,000 in 2004 to 460,000 last year. This year, more than 600,000 elementary kids are expected to take the tests. The worry is that this preoccupation with test results may end up backfiring with children losing interest in English.



Amid the English test boom among children, the nation’s English education providers are vying to create new kinds of English proficiency tests. The Test of the Skills in the English Language (TOSEL) and the Spoken English Proficiency Test (SEPT Jr) have been recently developed by the nation’s English education providers. Private English cram schools are operating the classes, which are designed to prepare students for the tests. (Source: Korea Times.)

In response to low birth rates, the aging society, and globalization, the ministry decided to establish a public forum for a reform of the school system in the first half of this year and devise a comprehensive plan to push ahead with the school system reform by 2007. It is planning to change the existing semester system which starts in March into a September semester system.

The Korea Educational Development Institute proposed last year to change the 6-3-3-4 system into the 5-3-4-4 system. Kim young-sik, vice minister of education, said, "School age population and working age population are on the decline, but people start working at a later age than other countries. Against this backdrop, a reform of the school system is inevitable," adding, "As this issue cannot be delayed, we will come up with a reform measure by 2010 with a firm determination." (Source: Donga Ilbo.)

Two Saturdays off a Month From the new school year starting in March, schools across the country will close for two Saturdays a month, the second and fourth, the Ministry of Education confirmed of 22 Feb 2006. Parents in the Seoul had mixed feelings about having their offspring at home on March 11 and 25 as many work leaving the children unattended. The additional Saturday-off reduces school hours by only 10 percent or one hour a week for most pupils, but first- and second-graders will be taught the same number of hours. The ministry said it would expand after-school care for elementary schoolchildren both of whose parents work or who come from low-income households.

Korea to Start Independent Public Schools (Charter Schools) On 8 Feb 2006, it was announced that Korea would try a new model for schools similar to the U.S.’ so-called charter schools, which would be independently managed by companies or individuals once approved by education offices and local governments. The ministry said it would start a pilot project for the schools next year in the hope that the new model will introduce some flexibility to Korea’s one-size-fits-all public education that takes no account of differences in ability among students. Managed by businesses, religious groups and public school principals, the schools would be guaranteed autonomy in selecting students, hiring faculty and designing the curriculum but must have their charter vetted and are subject to fiscal audits. They will be funded in equal share by education offices, local governments and parents. It was planned for some 30-50 schools to participate in the pilot project, assuming that at least one elementary, middle and high school will be selected for each city and province.

ROK to Stop Producing Government Textbooks On 29 Jan 2006, the South Korea's government said had decided to stop the publishing of textbooks for elementary, middle and high school students and enable private publishers to produce most of them. To that end, guidelines on how publishers can get government approval for their school textbooks will be worked out within the year to facilitate the development of new textbooks from next year, the Education Ministry said.

(SITE NOTE: Though this may seem trivial, it is a major shift as it now deals with the approval of the CONTENT -- procedures for review and approval, the criteria utilized, and most importantly cost. Government textbooks are non-profit, but published textbooks deal with profit. The selection process will most likely follow those of Japan where the Ministry of Education approves the books submitted for review and the schools then select textbooks from the approved list prior to the school year. The biggest danger is that this measure allows the progressives and supporters of revisionist history to shape the content of text books. This will need to be monitored closely by conservative educators as progressive elements (i.e., Korean Teachers and Education Workers Union) may try to submit their "revisionist history" texts.)

E-learning Credits for Servicemen Considering that 85 percent of military servicemen are attending or graduated from a university or community college, the ministry plans to revise related laws to establish a system in which they can perform military duties while studying and allow them to gain up to six credits in a year through e-running.

Furthermore, the ministry also intends to change the transfer regulation which admits a three-year community college graduate as a junior of a four-year university into one that accepts such graduate as a senior. Under the new regulation, graduates from three-year colleges majoring in nursing science are expected to suffer fewer disadvantages in getting a job in U.S. hospitals or in salary. (Source: Donga Ilbo.)

Uri Party Plan to Merge National Universities in Trouble On 16 Jan it was reported that the national university merger plan proposed by Uri Party lawmakers was expected to trigger a strong backlash from the universities involved. Because the plan did not have legal basis, the Uri Party planned to present a bill, ‘Act on the Establishment and Operation of National Universities.’ This law will be more powerful than the current Presidential Decree on the Establishment of a National University. According to the bill, the current 40 national universities will be merged into less than 10 universities in accordance with geography, such as Daejeon/Chungnambuk, Gangwon, Busan/Gyeongnam/Ulsan, and Gwangju/Jeonnam.

Another stumbling block was the Uri Party was considering calling the universities: First National University, Second University and so on, instead of Seoul National University, Jeonnam National University, and Gyeongbuk National University. The bill was to be presented to the National Assembly in Feb 2006. Universities that have already started merger talks are stuck in the middle of negotiations, and some worry that if the titles of national universities are changed, current universities may lose prestige. (Source: Donga Ilbo.) (See Higher Education in Korea: A Slanted View of College Entrance (Nov 2005) for background information.)


Student Reviews her College Scholastic Aptitude Test scores at Gujeong Highschool (Feb 2006)

Top Universities Halve Freshmen Intake for Medical Schools High school seniors applying for medical college will face fierce competition since Korea’s leading universities are halving their undergraduate intake for medicine starting from the 2007 college entrance exam as part of plans to turn their medical faculties into U.S.-style graduate schools. They are Seoul National, Yonsei, Korea, SungKyunKwan, Hanyang, Chung-Ang, Catholic, Chonnam and Yeungnam universities.

Four others -- Chungnam, Chosun, Dong-A and Inha universities -- will stop admitting undergraduate medical students altogether. Halving undergraduate intake is the first step to converting to full graduate schools, a pet plan by the Education Ministry that has met with some resistance from universities.

The ministry said on 16 Jan that it will accept applications from universities that want make the conversion until Feb. 3, before the application deadline for the second stage of the Brain Korea 21 academic support project. It said Korea, Catholic, Dong-A and Inha universities already decided to make the switch, and SNU, Yonsei, SungKyunKwan and Hanyang - which have so far held out -- are expected to follow suit. The ministry says refusenik universities will not be eligible for Brain Korea support, which would mean a considerable loss of funding. (Source: Chosun Ilbo)

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See Private School Law Escalate into Nationwide Crisis (Jan-Dec 2006) for an on-going dispute over the Private School Law.

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Freedom of the Press: Korean-style (or "Gangster Press" Under Siege) (Jan-June 2006) The petitions for the controversial Newspaper Law and Press Arbitration Law was submitted to the full bench in closed sessions on 5 Jul 2005. The ruling of the Constitutional Court is anticipated in Jan 2006 -- six months after the petition was accepted -- though it may be longer because of the serious questions dealing with Constitutional law -- and the current moves of the Roh administration to stack the courts. The Roh administration's battle with major newspapers is based on his assumption that the newspapers have a "social responsibility" to not forment dissent -- meaning that they should not criticize the administration officials, policies and programs -- although it is a firm principle of +international law that public organizations and officials must accept greater scrutiny than private persons.

The Roh administration has had constant problems with the conservative press -- and blames it on poor public relations; ineffective communication of his agencies of their programs; and biased reporting on the part of the press. Roh personally blames the press for "filtering" his remarks and creates misunderstandings of his intentions. Roh has taken to communicating directly with the people through the internet. He personally responds to issues on the Cheong Wa Dae website.

Cheong Wa Dae yesterday (16 Jan) opened presidential blogs on three separate private internet portal sites to enable interactive communication between the people and the Presidential office. The three Cheong Wa Dae blogs will convey President Roh Moo-hyun's personal thoughts on a comprehensive blueprint for long-term national projects while touching upon contentious issues for the year. Six memos have been posted on the three websites so far including the President's comments explaining the inevitability of globalization, the controversial project to move government buildings to a new administrative city at Yeongi outside of Seoul and the national pension fund.

"Cheong Wa Dae aims to provide various information and news reports on the presidential office directly to netizens," said Kim Man-soo, spokesman of the Blue House. The website also opened a bulletin board that would allow citizens to add their personal comments to postings in order to include netizens' views on policymaking. "Even those critical of the president, are available on the section and presidential officials will reflect various opinions," added Kim.

Entitled "The thoughts of the President," the three Web logs are to provide the presidential message through a series of articles, graphics, flash media and moving pictures. Cheong Wa Dae has recently widened public relations activities through operating another Blue House section on a private internet service in November. The portal service, paran, an internet company manages and organizes the content that the presidential office provides without paying royalties . The main opposition Grand National Party has criticized Cheong Wa Dae saying it is providing the additional information service for political purposes. (Source: Korea Herald.)