South Korea’s GDP per capita is faster than Japan’s, Nikkei: South Koreans don’t feel it

A few days ago, the Japanese media heavily reported data from the Japan Economic Research Center, which suggested that the per capita GDP of South Korea and Taiwan will surpass Japan in a few years. Beating Japan in 2018, the gap will only widen in the future. But South Korean economic experts say the data doesn’t necessarily capture the full picture, with most South Koreans not enjoying the economic fruits.

According to the latest research by the Japan Center for Economic Research (JCER), by 2028, Taiwan’s per capita wealth will surpass Japan’s, which has also attracted a lot of media coverage in Taiwan. Exports rebounded rapidly after the epidemic, and Taiwanese people have a feeling that everyone is rich or is on the way to becoming rich, and that Taiwan will return to the head of the four little dragons in a few years.

Overtaking Japan, South Korea will be one step ahead of Taiwan. The Japan Economic Research Center expects South Korea to surpass Japan in nominal GDP per capita in 2027, and the South Korean media also made headlines, but South Korea and Taiwan reacted differently, and it seems that few South Koreans discuss the issue. The Nikkei Review noted that South Koreans’ lack of interest in the issue appears to reflect South Korea’s grim economic reality that “ordinary workers are not feeling the benefits of the country’s economic progress.”

The analysis pointed out that South Korea is known for its long working hours in terms of hourly productivity, and South Korea remains at the bottom of the OECD rankings in terms of hourly productivity. And while South Korea’s average salary exceeds Japan’s, income inequality is also rising rapidly.

The reason is that big company unions have huge influence in South Korea, and under political pressure, chaebol family conglomerates and other big companies are often forced to agree to aggressive wage increases demanded by unions. Widening the pay gap between large companies and small businesses, which make up the majority of South Korean employers.

To live a stable and comfortable life, South Korean graduates know that they must squeeze into big companies or enter the government to take full-time jobs. This has led to an employment crisis for South Korean youth. The youth unemployment rate is about 25%. Many people simply give up looking for jobs, and the employment rate has also declined.

In order to protect the wages of young people, President Moon Jae-in has raised the minimum wage by 42% within five years since he took office in 2017. Now the minimum wage in South Korea is US$7.66 an hour, which is not far from Japan, but it has the opposite effect. Many independent companies simply ignore part-time jobs. staff.

Furthermore, using PPP to calculate GDP per capita ignores real estate prices. Since Moon Jae-in took office, apartment prices in Seoul have more than doubled in less than five years, making it impossible to buy a house in Seoul without parental support.

South Korea’s fertility rate in 2020 is only 0.84, half that of Japan and lower than Taiwan’s 0.99. Young South Koreans say the reasons for not having children are huge debt and high housing prices, the poverty rate of the elderly is about twice that of Japan, and the suicide rate among the younger generation has recently increased by 30%. In recent years, the world-famous Spanish pilgrimage route has frequently seen young South Koreans, which reflects the resolute will of the South Koreans, and perhaps how strong the uncertainty in their hearts. Economic data is out of touch with reality, and South Koreans don’t feel that life has actually improved, so surpassing Japan’s numbers is nothing to celebrate.

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