Social Capital in Structural Reform: Korea‘s Experience -
Cheol-Kyu Park(1)
- 1. The Role of Social Capital in Structural Reform
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Social capital has played a pivotal role in the structural reform that has taken place since the 1997 financial crisis hit Korea. During the first stage of the crisis, for example, the ‘Gold Gathering Movement’provided the momentum needed to overcome a critical economic situation. Social capital also had a significant impact on social cohesion and integration. As the conflict between the haves and have-nots became more visible, civil organizations stepped in to minimize the social costs associated with economic restructuring. Civil organizations played a major role in expediting the institutionalization of new socio-economic policies and systems. As the number of civil organizations increased the whole structural reform process was monitored very closely and calls for greater transparency and accountability became louder and more frequent. The National Basic Livelihood Guarantee System has become a matter of law thanks to a petition by civil NGOs.
- 2. Changes effected by Social Capital during Structural Reform
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The socio-economic paradigm shifted during the restructuring process. Many outdated social values were replaced by new ones. Substance replaced form. Quality considerations took precedence over quantitative concerns. Emphasis has now shifted from size to profitability. Global standards and transparency have become an ongoing priority. Labor market flexibility has become a higher priority than security. Performance rather than seniority is now the basis of salaries. Lifetime career development has replaced expectations of lifetime employment. The sense of attachment to one’s workplace has waned as job mobility increased. Social gatherings are now more commonly on the basis of shared interests and values rather than having the same employer. Social networks have become more horizontal. Trust in individuals and groups is now often transferred to the institutions. The adverse consequences of structural reform include more non-regular workers, diminishing worker loyalty, a widening gap in incomes, and an increase in individualism.
- 3. Tasks for the Future: National Integration
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Social capital changed and developed the Korean society very dramatically during the period. The society and economy had jumped a step further by virtue of the crisis. Without crisis and subsequent structural reform effort, it would have taken much longer period of time. Crisis worked as a stimulus. Reform agenda of new government widely ranges from politics to economy. One of the most important reform agenda is social integration by class, generation, and region. In order to achieve the reform agenda of social integration successfully, Korea’s social capital should be more institutionalized. With the development of society, trust in person and group shall be transformed to trust in institution. Vertical network shall be changed to a more horizontal one. Reform shall become more voluntary. Strong leadership by the top must be fully supported by voluntary participation of people. Because reform is somewhat noisy and painful it can sometimes erode social cohesion and efficiency. When rightly aimed and well coordinated, however, efforts to insure social welfare and security fuel national development in the long run. If consensus can be reached on that point, the question then becomes how to mobilize the social capital of a nation in a way that insures the entire population is pulling and pushing in the same direction at the right time.
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(1) Director, Human Resources Policy Coordination Division, Economic Policy Bureau, Ministry of Finance and Economy, Republic of Korea. He received a Master’s Degree in economics from the University of Michigan, Ann Arbor, USA, and also worked in the Asian Development Bank as a Director’s Advisor from 1997 to 2001. His area of work is policy coordination with social ministries, such as Ministry of Labor and Ministry of Health and Welfare, with respect to human resources management and social welfare system.