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offshore wind farmSouth Korea’s government announced plans to construct an 8.2 gigawatt “offshore wind facility by 2030.” Once completed, the project will stand as “the world’s largest single offshore development.” The project comes with economic and environmental advantages for South Korea. In order to help the economy recover from the COVID-19 pandemic, the offshore wind farm will increase revenue and energy production. The plan forms part of President Moon Jae-in’s Green New Deal project. The Green New Deal began in 2020 and will help Asia’s fourth-largest economy reduce its dependence on fossil fuels.

Offshore Wind Farm Funding and Benefits

The offshore wind facility project has already garnered significant funding. Several companies have contributed $42.4 billion to the project and the government will cover $802 million of the cost. In addition to generating renewable energy, the offshore wind project will create 5,600 jobs in the area. It will also extend South Korea’s “existing 1.67GW wind power capacity to 16.5GW by 2030.”

South Korean officials state that the wind energy facility “will produce energy equivalent to the output of six nuclear reactors.” The project has garnered significant support around the country due to its many benefits. A signing ceremony recently occurred for the new wind project in Sinan, a coastal town in the southwest region of the country. The offshore wind farm project is predicted to make an impressive impact on the country’s economy due to citizen, government and fiscal support.

Economic Impact of COVID-19 on South Korea

South Korea’s early response to the COVID-19 pandemic was successful as early testing and containment of the virus limited spread. However, the virus caused an economic recession due to halted business operations, closed borders and restricted mobility. For the first time since 2003, South Korea fell into a “technical recession.” In the first quarter of 2020, South Korea’s GDP declined by 1.3% followed by a second quarter decline of 3.3%.

The recession was caused greatly by a lack of demand for South Korean exports. Exports make up about 40% of the country’s GDP, so without the typically high supply and demand for products, South Korea’s economy was hard-hit. The economic decline also led to job losses across multiple sectors such as services, travel, hospitality, retail and manufacturing. As a consequence, South Koreans experienced harsh economic impacts, especially those already in poverty.

How Wind Power Improves Poverty

Despite South Korea’s status as a large world economy with high rankings in terms of education and healthcare, it still has a high poverty rate. The OECD ranked South Korea fifth among 33 countries for relative income poverty, with a rate of 16.7%. Relative income poverty is defined as “the ratio of the number of people whose income falls below half of the national median household income.”

Renewable energy sources such as wind power can help reduce poverty by decreasing a country’s reliance on fossil fuels. Fossil fuel prices can fluctuate drastically, causing instability in the economy. Wind turbines can replace the use of fossil fuels. The renewable energy sector also creates jobs and allows for energy security. With the power to use clean energy and bring economic prosperity to South Korean citizens, offshore wind farms provide a solution to poverty reduction.

The Future of Wind Farms

Overall, South Korean offshore wind farms could help South Korea bounce back economically after the COVID-19 pandemic. Wind energy is a sustainable resource as it is readily available. In comparison to fossil fuels, wind energy is more consistent and less expensive to harness. The boost in wind power could also place South Korea on the leaderboard for renewable energy.

Future prosperity and poverty reduction in South Korea will come from inclusive economic growth. With the use of renewable energy sources, sustainability and economic success are possible. Increasing accessibility to energy will thus help South Korea win the fight against poverty.

– Courtney Roe
Photo: Flickr

Income Inequality in South Korea
As South Korean film “Parasite” celebrates an Oscar win, the conversation about income inequality in the nation is appearing in public discourse again. The film’s portrayal of the income gap between South Korea’s poor and rich portrayed a bleak picture. Income inequality in South Korea is most apparent in the nation’s education system and affordable housing. South Korea recently elected President Moon Jae-in in 2017, whose platform promised to reduce the income gap in South Korea. As a result, citizens are more conscious about income inequality than they have ever been. What is the reality of income inequality in South Korea? What are some of the solutions experts suggest will alleviate this issue?

The Economy

The society and economy in South Korea function on a winner-takes-all mentality. Some studies indicate that South Korea has one of the fastest-growing income gaps. The nation’s P90/P10 ratio, which compares the income of those in the top 10 percent to the income of the remaining 90 percent, indicates an interesting trend. While the overall P90/P10 ratio shows that income inequality in South Korea has improved since 2011, the curve rose between 2015 and 2017. Further, in 2017 the Organisation for Economic Co-operation and Development (OECD) ranked South Korea 32nd based on the P90/P10 ratio.

The Education System

One can see an aspect of income inequality in South Korea in its education system. According to the OECD, nearly 70 percent of South Koreans, aged 25 to 34, completed some form of tertiary education. Comparatively, the United States’ tertiary education attainment rate of 49.4 percent makes it clear that South Korean culture puts a tremendous emphasis on college education. Ironically, this demand for higher education has significantly lessened the value of the degree. This decline of value in college degrees has resulted in students competing aggressively to gain acceptance to the three most prestigious universities in Seoul.

Subsequently, to assure children’s competence in the ever more competitive academic scene, many parents send students to “Hagwon,” or private after-school education institutions. In 2017, for example, reports suggested that 83 percent of 5-year-olds in South Korea were studying in these private institutions.

In addition, estimates determine that South Korean parents spend over $15 billion on private education annually. In only a single year, from 2016 to 2017, South Korean spending on private education rose 5.9 percent. Education in South Korea is becoming more burdensome for Korean parents who are not as financially well-off because, in the case of illegal private tutoring, one institution charged up to $8,000.

The Housing Market

Individuals who live in semi-basement homes also reflect income inequality in South Korea. As of 2015, over 360,000 households have a semi-basement floor-plan. The conditions in these semi-basement homes include lack of sunlight, the prevalence of critters and moldy smell due to homes’ high humidity. As a result, these residences became the stock image of housing for the poor. In Seoul, the country’s capital, the rising housing costs in South Korea are impacting these semi-basement homes.

According to the Korea Appraisal Board, the average apartment price in Seoul surpassed 500 million won (about $413,541), meaning that buyers need at least 300 million won (about $248,125) in order to even consider a purchase. This seemingly continuing rise in housing prices is making it harder for the average person to maintain responsibility for an apartment.

The Government’s Reaction

The government’s response to income inequality in South Korea takes the form of restructured tax policies. Since the 2017 election of President Moon Jae-in, the Korean government is working to expand the country’s elderly welfare and unemployment benefits. In this pursuit, the current administration imposed stiff tax hikes in 2017 which targeted leading corporate conglomerates, investors and high-income individuals. Estimates determine that this newly imposed tax plan will raise approximately $3.14 billion to support welfare programs. Many Koreans hope that this newly gained revenue will improve the circumstances for the ever-aging population of South Korea. In addition to increasing taxes for high-income South Koreans, the current administration has also increased the minimum wage.

However, there are concerns over how effective these new policies might be. For example, some reports suggest that the administration’s increase in minimum wage throughout the country might backfire. In response to the rising minimum wage, many small and medium-sized businesses simply cut back the hours that workers can to work.

Income inequality in South Korea is a complicated issue. The portrayal of families living in semi-basement homes paints a dismal picture of the middle to lower class. The ever-rising housing and education costs limit the accessibility of these resources for many South Koreans. The government’s effort to close the income gap in South Korea does not seem to be entirely effective either. However, it is significant that the South Korean government is taking active measures against income inequality. While there are plenty of issues to tackle, many South Korean citizens hope that the current administration’s efforts will result in a future with more equal opportunities and financial success.

YongJin Yi
Photo: Flickr