Shared growth: master key to advanced economy

Shared growth: master key to advanced economy

Yoo Jang-hee, Chairman of the Commission on Shared Growth for Large and Small Companies, talks to Business Focus during a recent interview at his office in Seoul. Korea Times photo by Shim Hyun-chul President Lee Myung-bak encourages a worker at a small company located in Suwon, Gyeonggi Province in his recent visit aimed at checking situations of small and medium-sized enterprises (SMEs). It has been one of his top priorities to boost SMEs. Korea Times file Officials of the Commission on Shared Growth for Large and Small Companies announce industries suitable for small companies during a press conference last September. Korea Times file Conglomerates will be encouraged to give fair opportunities to SMEs both inside and outside of Korea By Kim Tae-gyu When big firms do overseas businesses with state funds such as development assistance programs, they are strongly advised to form partnerships with small- and medium-sized enterprises (SMEs). This is aimed at strengthening SMEs, whose growth has been arrested by chaebol or family-oriented big businesses’ monopoly on resources, and helping correct a lopsided industrial structure to be more in their favor at the cost of weakening the national economy overall. Of course, it is a small step that will go with the existing encouragement and incentives for conglomerates to create partnerships with SMEs in non-governmental projects, said Yoo Jang-hee, chairman of the Presidential Commission on Shared Growth for Large and Small Companies (CSG) during a recent interview. “I visited Vietnam recently where many big Korean firms have businesses. They mostly tapped into the country with their own subsidiaries, not giving chances to outstanding SMEs,” Yoo said. “We would ask large companies to change the practice so that SMEs can have fair opportunities overseas. In particular, they have stronger reasons to do so in programs where Korea’s taxpayers’ money is involved.” Yoo, who took the reins of the CSG earlier this year, said that large-sized corporations had better embrace the suggestions not merely for SMEs but also for their own shakes. “In my view, SMEs sharpened by competition might offer better benefits to the big firms rather than their affiliates, which are feared to be lacking competitive edges due to hitherto protection of their parent companies.” The agenda, which might rub against conglomerates dubbed chaebol, is the CSG’s latest initiative of underpinning exports of SMEs, which is one of the five major missions of the blue-ribbon commission. The recommendation has no legal binding power but the public opinions and the social atmosphere supportive of SMEs practically forced them to pay keen attention to the CSG guidelines. Yoo said the win-win growth without regard to corporate sizes is the foremost task for Korea to lead in the global economy. “We have moved up from the economic backwaters to become one of the world’s top-tier economies and we have many champions like Samsung, LG, Hyundai, SK and Hanjin,” he said. “Their mush-storied success cases should be respected but their ‘partners’ have been somewhat estranged. The task of shared growth between them are the master key for Korea to become the genuinely advanced economy of the 21st century.” Action plans The joint advances are a global version of the CSG’s agendas, which include selection of SME-only items in Korea where big companies are discouraged from entering. Last September, CSG picked a total of 16 industries as suitable only for SMEs including traditional sauces, soaps, cardboard boxes, plastic moldings and automobile component recycling. It plans to add a flurry of service and retail areas to the list later this year and toward the end, massive research are currently underway. Yoo fell short of saying that the CSG plans to expand the SME-only industries to exports but urged conglomerates to take proactive actions for Korean SMEs to rise because they would not be able to keep competitiveness in some items in the face of emerging low-wage countries like China and Indonesia. ``For example, big companies now export a large chunk of clothing but smaller outfits have the capacity to take charge of the markets although they cannot wade into the overseas markets on their own,’’ the 72-year-old said. ``Large corporations have successfully explored offshore markets. Rather than losing the markets to Chinese competitors, they had better open the roads for our SMEs.’’ The professor-turned-chairman said that its policy of underpinning exports of SMEs are based on two tracks _ one is the above-mentioned strategy of joint advances and the other is to stimulate SMEs. ``In finding their purchasers, many SMEs have been accustomed to the easy solution of selling their products in bulk to large-sized companies up until now without the efforts of making a foray into other states,’’ Yoo said. ``They should change the long-held, domestically-oriented mindsets first and with support from big companies, they will have a shot at making splashes in the world.’’ Indeed, chaebol units have been mostly responsible for exports of Asia’s No. 4 economy where such exporters as Samsung Electronics and Hyundai Motor Group are based. The former is the world’s largest manufacturer of semiconductors, flat-panel displays and mobile phones while the latter has joined the rank of the world’s top five automakers. Currently, a mere 2.4 percent of the country’s numerous SMEs sell their items outside of the country, which is comparable to double-digit rates of advanced economies like Germany. The low percentage has been dubbed as one of major concerns for Korea Inc. because SMEs account for more than 95 percent of the business in terms of its numbers and around 85 percent in terms of employment. Maintenance, repair and operation The professor emeritus at Ewha Womans University said that he will strive to put a break on conglomerates’ time-honored practices of offering maintenance, repair and operations (MRO) businesses to entities typically associated to their owners. Leading chaebol gave up MRO and outsourced suppliers over the past year as it surfaced as a national issue but many still assign the jobs to outfits related to the chaebol or its tycoons. MRO refers to businesses of providing non-core components such as the office supplies and fuels so that any companies involved can perform routine actions in order. ``We are thinking of making standards with regard to MRO. Out of many MRO items, we think that conglomerates had better offer the cleaning business to SMEs,’’ Yoo said. ` `That is also one of our top five missions along with one of promoting exports of SMEs.’’ In addition, he took issue with the problematic conventions where large firms took talented employees and technologies from their subcontractors and suppliers. ``We vie to establish some ways to prevent the practices.’’ Underperformers in honor class Asked about the CSG’s recent announcement on chaebol firms whether they successfully work together with their suppliers, Yoo said that all the players that received the evaluations were winners. After a year-long study on 56 large-sized companies, seven were listed in the rock bottom out of the four-grade scheme including Dongbu Engineering & Construction, Hanjin Heavy Industries & Construction, LG Uplus and Hyosung. They came under criticism because the CSG had surveyed upside of 5,000 subcontractors of the 56 to learn how they were being treated by their main corporate customers. The ``underachievers’’ will not be punished but they will suffer disadvantages relative to those who garnered good reviews in the CSG annual will get special treatment from the government. For example, the champions will be exempt from some investigations of the nation’s anti-trust watchdog as well as being given an advantage when applying for government projects. ``More than 1,824 qualify for the category of big companies. Out of them, the CSG has shortlisted the best 56 players, which we can boast of across the world,’’ Yoo said. ``Even though they received relatively low marks in the prestigious group, that does not mean that they are underachieving.’’ Yoo likened the seven companies in question with the worst grade to students at the accelerated program class. ``It is an honor to be included in the accelerated program class and members of the honor class get marks from As to Ds. Those who get Ds do not mean that they are inferior,’’ Yoo said. ``The school gives the mark to spur them to greater efforts. Regardless of the marks inside the honor class, their final report cards will carry As.’’ Smart power Since its inauguration in 2010 with the strong supports of incumbent President Lee Myung-bak, the CSG has generated controversies on the committee’s jobs and authority. President Lee put the issue on the front burner as the gap between large and small companies widened under his stewardship, which started in early 2008 just before the global financial crisis. The profit ratio before taxes of large corporations went up from 7.9 percent back in 2007 to 8.4 percent in 2010 but those for SMEs fell from 3.8 percent to 2.9 percent during the same period of time. Understandably, CSG has received mixed responses due to the conflicting interests of those involved. In particular, large-sized firms and their lobbies raised voices that CSG undermine their vested interests and sometimes labeled the committee’s dubious policies as ``not compatible with the market economy.’’ Yoo said that some misunderstandings led to such a clumsy situation at the onset of CSG because of some miscommunications, which he said are almost gone by now. He said some deemed the CSG’s scheme of chalking up cooperation between large outfits and small ones as a zero-sum game of taking something from the former so as to give them to the latter. But Yoo said what CSG guns for is actually a plus-sum game. ``CSG does not intend to ask for sacrifices of conglomerates. Rather, we delve into ways how they can sharpen their competitiveness through viable and sustainable partnership with their suppliers,’’ he said. The chairman with a Ph.D. in economics continued that large firms have to look after its partners to keep remaining ahead of pack. ``We do not regard all the front-runners as smart companies. Only business bellwethers that pay attention to losers and followers are called the smart power,’’ he said. Regarding the compulsory shutdowns of large retail chains _ twice a month _ he said that CGS pays a close attention from the perspective of the shared growth. As the SME-only items are expected to be added regarding the retail industry, the committee’s stance on the issue has been closely followed by not only the interest group but also media. Yoo has served as head of many research institutions, commissions and academic societies _ he was the dean of the Graduate School of International Studies at Ewha Womans University. He is still an honorary professor at the Seoul-based ivory tower and is serving as an advisor to the Korea Federation of Small and Medium Business. Over the past two years, he took the helm at BBB Korea whose thousands of volunteer members provide interpreting services around the clock and free of charges through mobile phones. He caught headlines as he offered the interpretation services himself together with many volunteers.

Kakao, Galaxy most searched IT words

Kakao, Galaxy most searched IT words

By Cho Mu-hyun Search words on popular Web portals are useful in finding out what issues and celebrities are grabbing people’s attention. Google Korea revealed Thursday a list of the most searched words in Korea country during the first half of the year in four categories, giving a clear outline of what topics Koreans were looking for most. In the information technology category, mobile messenger service Kakao Talk topped the list after launching a free Internet call service which caused heated debate over network neutrality. Samsung Electronics’ two smartphone products, Galaxy Note and Galaxy S3 took second and third place respectively for their stellar sales. Kakao Story, Kakao Talk’s social network service was fourth after garnering 9.2 million users in a week. Google’s Chrome was fifth for becoming the most used browser in the world. In the most searched news issue, controversial “Nanuen Ggomsooda,” meaning “I’m a petty trickster,” a comedy podcast that takes jabs at politicians was No.1. The Yeosu Expo was second due to the attention it garnered before opening in May. Comedy TV program "Muhan Dojeon," or “Infinite Challenge,” being cancelled due to the MBC union strike was third. The most searched word without categorization was Hwayoung, a member of Korean pop group T-ara, for her accidental exposure of a breast during a broadcast in January. MBC Drama “The Moon Embracing the Sun,” a love story of a fictional king of the Joseon Kingdom, was runner-up. Actress Han Ga-in, who stars in the television drama, was third. In the most searched celebrity category, Hwayoung was in first place for the same January incident while her pop group took fourth place. Teenage singer-actress UI, who came into the spotlight in 2008 for her album “Lost and Found,” took second. Google says her two concerts in Japan in March and May helped her secure that position. Kim Soo-hyun, who plays the imaginary king in “The Moon Embracing the Sun” and rose to stardom via the drama’s popularity was third, the only male among the celebrities.

Spreading economic woes

Spreading economic woes

Rate cut is double-edged sword for faltering economy Following its unexpected interest rate cut Thursday, the following day the Bank of Korea (BOK) lowered the country’s economic growth outlook for this year to 3 percent from its forecast of 3.5 percent in April. The revised outlook will mark the country’s slowest annual growth since 2009, when its economy grew 0.3 percent in the wake of the Lehman Brothers debacle. The central bank cited debt woes in Europe hitting exports, and household debt that is putting pressure on domestic consumption. A day earlier, the central bank cut its key interest rate by 25 basis points for the first time in more than three years. The BOK’s latest moves reflect the reality that Korea’s economic woes are more serious than thought. In fact, slowing exports, coupled with shrinking domestic demand, are casting a dark cloud over the country’s economic prospects. Behind these glooms are the worsening eurozone crisis, China’s economic slowdown and a weak recovery in the United States. China, the country’s largest export market, reported Friday that its economy grew an anemic 7.6 percent in the second quarter, raising fears that Korea might be hit hard by its economic malaise. BOK Governor Kim Choong-soo said the rate cut was a preemptive measure to buoy the economy taken in the midst of increasing downside risks to growth. Yet critics lashed out at the central bank for being ill-timed in its rate cut. This means that if the bank had raised key interest rates earlier, say last year, without being conscious of the government that usually dislikes rate hikes, household debt wouldn’t have swelled that much and it would have been freer to lower rates now. The rate cut is seen as a move to boost exports, which rose a meager 1.3 percent year-on-year in June. Moreover, Korea had no other alternative but to follow in the footsteps of the European Central Bank and China’s central bank that slashed interest rates last week. Brazil cut its rate to a record low Wednesday. Domestic demand remains in the doldrums due to fears about economic slump and asset deflation. More recently, even the rich appear to be tightening their purse strings with sales at discount outlets and department stores falling 7.4 and 1.2 percent, respectively, in June. Given that the rich are hardly affected by the economic slowdown, it suggests that more people have become skeptical about the economic outlook. Prospects for the labor market are also gloomy. The economy added 365,000 jobs last month year-on-year, but this marked the first time since last September that newly created jobs have fallen short of 400,000. Taking into account the latest economic data, the government is feeling the need to boost the economy through all means available. The rate cut is all the more plausible, given that inflation, as measured by consumer prices, has been contained below 2 percent for four months in a row. The rate reduction is a double-edged sword for the economy ― borrowers will benefit from less of an interest burden, whereas there is the possibility that household loans ― 911 trillion won at the end of March ― may begin to bounce back. Simultaneously, it runs the risk of inflating asset bubbles rather than stimulating the economy. With only five months remaining before the Dec. 19 presidential election, some skeptics raise the possibility that another economic crisis could hit the nation next year. True, there is no quick fix to economic woes but the government will have to brace for the worst. Politicians also should refrain from making unrealistic pledges to deceive voters.

Korea beats New Zealand 2-1 in Olympic warm-up

Korea beats New Zealand 2-1 in Olympic warm-up

Korea's Olympic football team beat its New Zealand side 2-1 in its final warm-up match on Saturday ahead of the London Olympics. Arsenal forward Park Chu-young scored Korea's first goal in the 18th minute at Seoul World Cup Stadium, but New Zealand's Shane Smeltz made it 1-1 in the 63rd minute. Ten minutes after the equalizer, Korean winger Nam Tae-hee came up with the winning goal after beating past two defenders. The Korean team, which sets its sights on the first Olympic medal, will leave for London on Sunday. Korea is paired with Mexico, Switzerland and Gabon in Group B. This will be the country's seventh straight Olympic appearance and ninth overall. But Korea has never won an Olympic medal in men's football, having advanced beyond the first round only twice. Korea was a surprise semifinalist at the 2002 World Cup, defeating football giants Portugal, Italy and Spain en route to a fourth-place finish. (Yonhap)

Defending coup d’état

Defending coup d’état

Does Park still think it revolution to save country? Barely a day after declaring her candidacy for the Dec. 19 presidential elections, Rep. Park Geun-hye caught her critics off guard. And she did so by pre-empting the debate on her weakest point: the dark legacy of her father and mentor, general-turned-president Park Chung-hee. Offense can be the best defense in politics as well as in sports. Not always, however, we are afraid. Hong Sa-duk, Park’s joint-chief campaigner, hinted Wednesday that there will be little change in the opinion of the ruling party’s likely candidate that the May 16, 1961 military coup d’etat staged by her father was a ``revolution to save the country.” ``To ask Rep. Park what she thinks of her father’s coup is similar to asking King Sejong what he thinks of his grandfather’s toppling of the Goryo Dynasty to set up the Joseon Kingdom,” the six-term lawmaker said. ``I wouldn’t advise her to become the president by going as far as to criticize her own forbears.” We wouldn’t blame him for comparing what’s happening in 21st-century Korea to the 14th-century kingdom if there were parallel lessons to be learned. But he made the grave mistake of degrading an issue of national concern into just another family matter. What Park’s critics ― and many voters ― want to hear are not a child’s views of her father but a would-be president’s views of a previous president, thus indicating her attitudes and qualifications as a potential leader. It is regrettable that Hong tried to water down, perhaps intentionally, such a need. Was he revealing the subconscious thinking of Park’s campaigners, that she belongs to a modern day Korean dynasty? Even more worrisome is the atmosphere within the Park camp that trivializes and casts aside attempts to verify her historical consciousness. ``This kind of debate cannot produce even a biscuit crumb,” Hong said. It is just amazing how the chief aide of the strongest presidential contender turns everything into a question of money. This is a very grave issue about which voters have the right to ask, and Park has a duty to answer as a candidate. A successful coup d’état is of course difficult to punish. Yet, that does not necessarily mean it was right. Successful or not, historians, here and abroad, have long concluded that it was just another political revolt led by a military elite common among Third World countries during the 1950s and’60s. It cannot be regarded as a revolution because no ordinary people and only military officers took part in it. More seriously, its belated political justification could lead people to think that the ends justify the means ― not a few socialists attribute it to rampant corruption and irregularities similarly gripping South Korean society now. If economic development can be the reason to justify it, then the Dec. 12 coup led by another general-turned-president, Chun Doo-hwan should also be viewed as a ``revolution to save the country,” because Korea’s economy enjoyed an unprecedented boom under Chun’s government. Reps. Park and Hong, both multiple-term lawmakers, are denying themselves by defending the most egregious acts that denied the nation’s parliamentary democracy by overthrowing democratically-elected governments by force. They must not drive voters ― once again ― into a one-dimensional choice between democracy and the economy.

Global PC shipments have sluggish Q2

Global personal-computer shipments stalled in the second quarter, a seventh straight period of anemic growth, amid economic weakness in Europe and waning demand for PCs in favor of tablets, according to Gartner Inc.

Shipments slipped 0.1 percent to 87.5 million units, market-research firm Gartner said in a statement Wednesday. Hewlett-Packard Co. clung to its spot as the top PC seller, followed by Lenovo Group Ltd., while Acer Inc. nudged aside Dell Inc. for the No. 3 ranking, Gartner said. Fellow industry researcher IDC also said shipments fell 0.1 percent, compared with the 2.1 percent growth it predicted in May.

An uneven economic recovery in the U.S., slower spending in Europe a

Visitors try out new iPads at an Apple Inc. store in Seoul. (Bloomberg)

nd the encroachment of Apple Inc.’s iPad and other tablets has caused PC demand to stagnate, according to Gartner.

“Uncertainties in the economy in various regions, as well as consumers’ low interest in PC purchases, were some of the key influences of slow PC shipment growth,” Mikako Kitagawa, a principal analyst at Gartner, said in the statement.

The recent stretch of sluggish growth contrasts with double-digit percentage gains in the previous decade, fueled by a spree of notebook-computer buying by companies and households. Customers now are less interested in those devices as new technology products and services emerge, Kitagawa said.

A reflection of that was seen in the U.S., where Gartner said second-quarter PC shipments dropped 5.7 percent to 15.9 million units. Tight government and education budgets also contributed to the U.S. decline, Gartner said. IDC said U.S. shipments fell an even steeper 10.6 percent, more than double the 4.4 percent drop the research firm projected.

The PC market may get a boost from a major promotion for new lightweight laptops known as Ultrabooks, supported by Intel Corp., the world’s largest computer-chip maker. Microsoft Corp.’s unveiling of a new operating system, Windows 8, also may provide a spark later this year, according to IDC.

“Consumers are delaying purchases, and vendors and retailers are slowing down their PC activities to clear existing inventories,” David Daoud, IDC’s research director for personal computing, said in a statement. (Bloomberg)

Apple was the only company among the top five computer makers to see sales rise in the U.S., the largest PC market, Gartner said. The Cupertino, California-based company had 12 percent of the U.S. market, in third place behind Hewlett- Packard’s 25 percent and Dell’s 21.7 percent.

PC sales in Europe rose 1.9 percent to 25.1 million units in the second quarter. Many customers held back on purchases because of the Euro-zone economic crisis, Gartner said. Shipments in the Asia-Pacific region grew 2 percent to 31.8 million units.

Earlier this week, Advanced Micro Devices Inc., the second- biggest maker of processors for PCs, reported an unexpected drop in second-quarter sales, citing weakness in China and Europe. (Bloomberg)

More than 100 dead, 50 injured in Nigeria oil tanker blaze

LAGOS (AFP) -- More than 100 people who went to scoop up oil from an overturned oil tanker were burned to death on Thursday after the vehicle caught fire, the information commissioner in Nigeria's southern Rivers state said.

"More than 100 people were killed in the inferno from the petrol tanker, while around 50 with severe burns have been hospitalized," Ibim Semenitari told AFP.

U.S. beats Korea in B-boy tournament

U.S. B-boy crew Massive Monkees Crew won the 2012 R-16 World B-boy Masters Championship, beating out two-time champions JinJo Crew of Korea.

More than 200 B-boys from 16 countries participated in the tournament held from July 7-8 at Olympic Hall in Bangi-dong, southern Seoul.

For the battle competition, five renowned B-boy judges from different parts of the world judged the teams on foundation, dynamics, execution, battle and originality. Only eight teams ― Korea, Japan, Belgium, Kazakhstan, U.S.A., China, Taiwan and Finland ― made it to the final rounds from the regional eliminations.

Massive Monkees Crew, the winning team of the World B-boy Masters Championship held last week in Seoul, poses with Korea Tourism Organization CEO Lee Charm (back row, center) after they received the award. (Korea Tourism Organization)

JinJo, representing Korea, battled against Massive Monkees in the semi-final and lost by one point with the final score of 2-3. Massive Monkees then beat Kazakhstan 5-0 in the finals. The crew received $15,000 in prize money.

“It feels great to win the championship. I have great respect for JinJo Crew because they came to defend the title three times. When you win once, everybody comes after you to beat you. We trained just for them and we came to Korea just for them. Winning championships is great but it should come from the heart and you really have to feel it with your heart to be a great B-boy,” said Twixx of the Massive Monkees from Seattle, U.S., during an interview right after the awards ceremony.

JinJo won the best performance award for the third consecutive time and received $3,000 in prize money.

The show was filled with celebrity guests including Jay Park, Ulala Session, Dok2 & The Quiett, and Canada’s beatbox champion KRNFX. More than 4,000 people attended the event, according to organizer Korea Tourism Organization.

By Lee Hyun-jae, Intern reporter (lhj137@heraldm.com)

Kakao, Samsung Galaxy top IT search on Google

“Kakao Talk” was the most popular information and technology search term on Google in the first half of this year, said Google Korea.

Korea’s mobile messenger, used by some 50 million people worldwide, recently made headlines over the announcement of its free mobile Voice over Internet Protocol service Voice Talk.

This has led to escalating tension between Kakao and two giant mobile carriers ― SK Telecom and KT, further helping Kakao Talk to be the most searched term on Google, the Korean subsidiary of the global search engine said.

LG Uplus, the smallest of the country’s three mobile carriers, was the only telecommunications company to welcome Kakao’s Voice Talk, while the other two fiercely opposed it, arguing that it could hinder investment in mobile infrastructure and put downward pressure on their bottom lines.

Also, Kakao’s launch of a free phone service application was followed by S&P and Moody downgrading the credit ratings of SK Telecom and KT.

Some 34 million people in Korea use Kakao Talk, accounting for 65 percent of the total mobile subscribers.

After Kakao Talk, Samsung Electronics’ Galaxy Note, which was introduced in October, was second most searched on Google.

Over 3 million Galaxy Note units were sold in Korea in the first half, according to Samsung Electronics.

This brand became Korea’s leading Long Term Evolution smartphone, which the tech giant will further promote at the 2012 London Olympics, the company said.

Also, Samsung’s new flagship Galaxy S3, which was first introduced in London, was the third most searched phrase on Google.

The smartphone, released in Korea this week, hit 28 markets in Europe and the Middle East in late May, and will be introduced in 145 markets by the end of this month.

By Park Hyong-ki (hkp@heraldm.com)

KARA named most popular Korean artist in Japan

KARA (DSP media)

KARA, one of the most popular Korean pop groups in Japan, was ranked 6th in the “2012 First Half Talent Power Ranking” according to Nikkei Entertainment, a Japanese entertainment magazine.

The five-member girl group proved its popularity, ranking the highest out of hallyu stars in Japan. The result was a pleasant surprise for the group as it ranked after the five members of Arashi, a Japanese boy group, who took the top five spots.

The survey of teenage girls in Japan placed KARA as the only foreign group in the top ten, beating out popular Japanese girl group AKB48 as well.

In addition, the girl group set the record of having sold 1,000,000 copies of its album in 23 months, the shortest time for a Korean artist.

By Lee Hyun-jae, Intern reporter
(lhj137@heraldm.com)

Prosecutors acquit all people involved in 'BBK letter' scandal

Prosecutors have acquitted all people involved in the so-called "false letter" scandal involving an imprisoned Korean-American businessman accused of falsely raising embezzlement allegations against incumbent President Lee Myung-bak during the 2007 presidential race.

The Seoul Central District Prosecutors' Office, which has been investigating the case since January, said there was no behind-the-scenes political influence that masterminded the writing of the letter.

The letter, which surfaced in 2007 at the height of the last presidential election, claimed that the previous administration made a "deal" with Kim Kyung-jun, who has been imprisoned in South Korea since the scandal, to come to Seoul and make unfounded accusations against Lee. This was allegedly so Lee, who was a former Seoul mayor and presidential hopeful, could be defeated in the polls.

The then-opposition party, the current ruling Saenuri Party, claimed that the letter was proof that the liberal Roh Moo-hyun administration was engaged in unfair efforts to distort the truth so its candidate could win the election, because Lee was leading in the polls.

Kim is a former business partner of Lee and former head of investment firm BBK, an Internet financial company involved in a stock scandal. Kim accused Lee of embezzlement and stock price manipulation related to BBK. A South Korean court, however, subsequently found Kim's claims against Lee lacked evidence and meted out a prison term.

Prosecutors said Shin Myung, a local whose brother was incarcerated in a U.S. prison with Kim, conveyed what he heard from his brother to Yang Seung-duk, an administrator at Kyung Hee University in Seoul.

Yang had political ambitions and wanted to score points with Lee Myung-bak's supporters, and asked Shin to write a letter that hinted Kim entered the country after an agreement was reached with the then-ruling party.

"It seems that throughout the entire process, Lee's campaign aides, including former lawmaker Hong Joon-pyo, who made public the letter in the first place, did not know how it came to be written," the prosecutor's office said.

It said that the letter incident was the result of Shin and Yang trying to win favor with the likely victor of the presidential race. Officials claimed Shin wanted to get his brother out of prison and hoped the letter would help his cause.

Despite such conclusions, Shin told reporters after the Public Prosecutors' Office made the announcement that he still felt certain that there were political manipulators behind the letter scandal.

He conceded that he wrote the letter himself, as announced by investigators, but said he was under the impression that Yang was being swayed by individuals in influential positions.

Shin said that he distrusted the results of the investigation, and will take the matter to any political parties willing to believe his story. (Yonhap News)

Jobless rate to stay high until 2013, OECD says

PARIS (AFP) ― The unemployment rate in advanced world economies will remain high at nearly 8.0 percent until the end of next year with about 48 million people jobless, the OECD said on Tuesday.

The “joblessness rate is forecast to remain high at 7.7 percent in the fourth quarter of 2013, close to the 7.9 percent rate in May 2012,” a report by the Organisation for Economic Cooperation and Development said.

“To get employment rates back to pre-crisis levels, about 14 million jobs need to be created in the OECD area,” it said, adding that 48 million people were out of work across the 34-nation zone in May.

“In the euro area, unemployment rose further in May to an all-time peak of 11.1 percent,” it said, referring to the 17 nations which share the currency.

“The recent deterioration in the economic outlook is very bad news for the labour market,” said OECD Secretary General Angel Gurria.

“It is imperative that governments use every possible means at their disposal to help jobseekers, especially young people, by removing barriers to job creation and investing in their education and skills.

“The young are at most risk of long-term damage to their careers and livelihoods. Targeting the most cost-effective policies is essential,” it said, stressing that most employers were only hiring on short-term contracts now.

The report cited variations across the zone with unemployment stable at 8.25 percent in the United States.

The Spanish jobless rate at 24.6 percent was the highest in the OECD and double-digit figures were also reported in Estonia, France, Greece, Hungary, Ireland, Italy, Portugal and the Slovak Republic.

The OECD said most emerging economies apart from South Africa weathered the financial crisis well but there has been a slowdown in some rapidly growing economies, especially Brazil, China and India.

Foreign phone makers struggle in Korea

Analysts attribute declining foreign presence to lack of marketing, distribution and AS service capability

Foreign mobile phone makers are facing difficulties in marketing their brands in Korea, one of the most wired countries in the world, and competing against local giant players such as Samsung Electronics.

Industry sources said that this is nothing new as the local market has always been dominated by local companies, with little space open to foreign players to increase their presence, even during the feature phone boom.

Nokia may have grabbed a large market share in feature phones globally, but things were not the same in Korea, and it remains that way following the introduction of smartphones, they said.
One source said that Samsung Electronics, LG Electronics and the reviving Pantech will continue to take most of the market share in the country, whereas foreign makers struggle to make themselves noticeable to Korean consumers who are generally known to be not only tech-savvy but also picky.

Most foreign makers’ mobile phone market share is less than 1 percent.

HTC accounted for a 0.7 percent share, followed by Motorola’s 0.4 percent and Sony’s 0.3 percent in the first quarter of this year, according to Gartner, a tech research firm.

The tide has even turned for Apple, which ignited the smartphone craze with the iPhone. Its market share in Korea plummeted to 2 percent from about 23 percent two years ago.

Altogether, the foreign share amounts to a mere 3.4 percent. Meanwhile, mobile phones of Samsung Electronics, LG Electronics and Pantech saw their shares increase to more than 90 percent over the last two years.

A source said that the declining foreign presence is in part attributable to the lack of marketing, distribution and after-sales service capability equivalent to local giants.

“There have not been eye-catching phones, or even advertisements, maybe with the exception of iPhone4S, released by foreign makers in the market for quite some time,” the source noted.

Motorola and Sony have not introduced any new lines of smartphones in Korea since the third quarter of last year, according to media reports.

Also, no plans have been announced by Korea’s three telecommunications companies ― SK Telecom, KT and LG Uplus ― to market foreign mobile phones, excluding Apple’s new smartphone whose release date has been delayed.

Analysts said that Korean brands are likely to dominate in Long Term Evolution phones as they were some of the earliest LTE adapters.

Samsung Electronics said that more than 50,000 consumers bought its new flagship Galaxy S3 LTE smartphones on the first day of their release on Monday.

It had sold 10,000 Galaxy S and 24,000 Galaxy S2 smartphones on their respective first days.

By Park Hyong-ki (hkp@heraldm.com)

Rep. Chung's arrest motion rejected

Rep. Chung's arrest motion rejected

Rep. Park Joo-sun, top, an independent, walks past Rep. Chung Doo-un of the ruling Saenuri Party after making a speech at the National Assembly, Wednesday. Parliament vetoed the arrest of Chung but allowed Park, who was earlier convicted of violating the Election Law and sentenced to two-years in prison, to be taken into custody. / Yonhap Saenuri faces criticism for protecting one of their own; Park Geun-hye skips vote By Kang Hyun-kyung Rep. Chung Doo-un of the ruling Saenuri Party survived a parliamentary motion Wednesday to have him arrested on charges of receiving money from the head of a troubled savings bank together with President Lee Myung-baks elder brother, Lee Sang-deuk. Rep. Park Geun-hye, seen as an almost shoo-in as the party’s standard bearer for the Dec. 19 election, abstained, facing criticism for not being decisive enough, while the party leadership, filled by Park’s loyalists, offered to resign. The motion was rejected as out of 271 lawmakers present, 74 cast ayes and 156 nays, 10 votes were declared invalid, and there were 31 abstentions. Chung, a close aide of President Lee, was cited as an accomplice to the elder Lee in an arrest warrant issued to prosecutors, which stated that the two were together just before the presidential election in 2007 when they received 300 million won from the bank head, and Chung put the money inside the trunk of his car. In a separate vote, the lawmakers passed a motion to allow prosecutors to arrest Park Joo-sun, an independent lawmaker who used to belong to the main opposition Democratic United Party (DUP). Park received a two-year jail term for an Electoral Law violation and is now appealing. A total of 148 lawmakers voted in favor of the motion. The prosecution will arrest and put Park behind bars as he received a 2-year jail term from a district court for violation of the Election Law, while they investigate him further. Rep. Lee Hahn-koo, the floor leader of the ruling party, and officials responsible for parliamentary affairs tendered their resignations to take responsibility for the failure to oust Chung. Their resignations, however, are unlikely to end the controversy as opposition parties condemned the Saenuri Party for protecting its lawmaker from the arrest. The vote is poised to damage frontrunner presidential contender Park Geun-hye as the ruling party decided to maintain a no-mercy stance toward lawmakers involved in corruption when she led the party. She has been credited as principled politician. But the Assembly veto will likely undermine her image to a great extent. The results are likely to deal a blow to the ruling Saenuri Party’s leadership as it linked the vote to efforts to remove lawmakers’ perks in an attempt to woo support ahead of the presidential election. Lawmakers have faced mounting calls to cut their privileges after repeated abuses of them angered the public. The ruling party and the main opposition Democratic United Party (DUP) called on their members to vote for the arrests as their leaderships were wary of negative fallout for the presidential election if they failed to approve them. Under the current law, legislators are immune from criminal prosecution or arrest while a parliamentary session is open. A backlash against such privileges erupted after the National Assembly became a symbol of incompetence, violence and loose ethics in the wake of a series of melees and chaos over divisive issues, including the free trade agreement with the United States. Prior to the vote, the Saenuri Party held a meeting of all its lawmakers on the issue. In a speech, Lee called on his fellow legislators to approve ousting the two. “It’s natural that as fellow lawmakers we would have sympathy for Rep. Chung as he is in trouble. But I believe we need to keep in mind that all people are equal under the law and put this ahead of our sympathy toward our fellow lawmaker,” Lee said. He said the vote would indicate whether the National Assembly has chosen a path for change or remains an entity representing the vested interest of lawmakers. Chairman Hwang Woo-yea also appealed to his fellow ruling party lawmakers to join together to vote for the measure, saying it could be a litmus test for the Saenuri Party’s reform drive. Meanwhile, DUP members were given a free vote. The motion calling for the National Assembly to agree on the arrest of sitting lawmakers for investigation has been submitted 45 times before. Only nine cases were previously approved, making Wednesday’s decision a rare one.

hkang@koreatimes.co.kr

President’s apology

President’s apology

Lee should feel ashamed over brother’s arrest Lee Sang-deuk, President Lee Myung-bak’s elder brother, was jailed early Wednesday morning after a Seoul court issued an arrest warrant on bribery charges. He has become the first brother of a sitting president to be arrested in Korean history. Lee is suspected of receiving 600 million won from the chairmen of two troubled savings banks ― Solomon and Mirae ― from 2007 to 2011 in return for helping them avoid regulatory audits and punishment. He also allegedly took bribes from his former employer, textile manufacturer Kolon Group. Angry citizens who lost deposits when savings banks were suspended hurled eggs at Lee, a former lawmaker of the ruling Saenuri Party, when he arrived at the court Tuesday. One of them briefly grabbed Lee by the tie, accusing him of playing a role in the string of closures of savings banks over the past two years. President Lee is expected to offer an apology, given that the arrest of his elder brother is a national shame. Cheong Wa Dae is reportedly agonizing over when and how Lee should apologize, but the prevailing opinion is that the chief executive will do so after his brother is indicted. The apology, if realized, would be the fifth since Lee took office in February 2008 and the third to be offered in relation to wrongdoings involving his relatives. Lee’s apology could be met with derision because presidential apologies have become a rite every five years owing to corruption charges against presidents’ kin and close confidants. Roh Gun-pyeong, the elder brother of the late former President Roh Moo-hyun, was arrested for corruption and before that, the sons of Roh’s predecessors ― Kim Dae-jung and Kim Young-sam ― were also detained on similar charges. The two brothers of Chun Doo-hwan, the general-turned-president, were put behind bars for influence-peddling. All the blame should be placed on President Lee who failed to deal with his relatives properly. In retrospect, the head of state had several chances to avoid the latest nightmare but he didn’t do what he should have done ― persuade his elder brother to retire from politics. President Lee had no words to excuse his brother’s arrest and called off his schedule for Wednesday. He should feel ashamed for defining his government as a ``morally perfect regime’’ last September. What can be learned from the latest scandal is that there are big loopholes in the country’s system of overseeing president’s relatives and confidants. At present, the office of senior presidential secretary for civil affairs is tasked with monitoring them, but it turns out that it has not been up to the task. In this respect, the nation will have to consider fundamental ways of stopping the repetition of corruption cases involving the president’s relatives and aides. Presidential hopefuls from the rival parties should learn lessons from the arrest of the president’s brother.

13 South Korean companies on Fortune’s Global 500

Thirteen South Korean companies made the ranks of Fortune Magazine’s Global 500 list on Monday.

According to the magazine’s online edition, Samsung Electronics Co. was ranked 20th in terms of sales in 2011.

SK Holdings, which was 82nd in 2011, climbed to 65th this year. However, Hyundai Motor Co. slid from 55th to 117th.

Samsung Electronics Co. was also 32nd on the Most Profitable list, which was first place among South Korean corporations.

Royal Dutch Shell, the Netherlands-based energy company, topped the Global 500 list. Wal-Mart, which was in first place last year, dropped to third. With Royal Dutch Shell, three other energy-related companies, Exxon Mobile, BP and Sinopec Group, made the top five.

In the Biggest Employers category, Wal-Mart ranked first with 2.20 million and China National Petroleum came in second with 1.67 million.



By Nam Yoon-seo
Intern Reporter
(jnam8257@heraldm.com)

Analytics culture: way to success

Analytics culture: way to success

High performance achieved through effective organization Cultivating an analytics culture is necessary to drive transformative change, and deliver on the full potential of your analytics investments. A prerequisite for high performance is being organizationally ready to make faster, smarter decisions and to drive cross-departmental ownership for the implementation of those decisions. While there are multiple facets involved in organizational effectiveness, getting the right leaders in place, breaking down silos, fostering the necessary culture and developing your talent are good places to start. According to a recent Accenture survey of 600 executives, eight out of 10 companies have not achieved their goals in analytics. And only one out of 12 respondents expressed satisfaction with the return on their investments. Here is a simple example. At Harrah’s, now Caesars Entertainment, service delivery metrics, such as the average time it takes to greet a customer or to deliver a drink, are reported to management on Sunday. The very next day, the property’s general manager can expect a call if the revenues are down compared to the same week in the previous year. After an analysis of Best Buy’s loyalty program, data showed that 7 percent of customers were responsible for 43 percent of its sales; therefore, Best Buy redesigned its store layout to meet the needs of those loyal customers. Further, this giant retailer quantified the value of employee engagement to customers’ in-store experience ― a 0.1 percent increase in engagement is worth more than $100,000 in a store’s annual income ― to inform its investments in the workforce. Quick action is a distinguishing feature of examples such as these. High performers do not simply gather and analyze data; they use the resulting insights to make smarter decisions faster. Their leaders are in sync on how to employ analytics in their service strategy and that vision percolates down through the organization. As a result, middle managers measure the right metrics, make decisions based on the best data available, and understand the significance of immediate action on the basis of those decisions. No technological solution, simply layered on top of existing processes and culture, can achieve these results. Further, existing analytical talent in organizations rapidly grows frustrated with added complexity. To drive transformative change fueled by analytics, employees should know how to use scenario-based or workflow analysis tools and build momentum by overcoming organizational barriers. As talent is hired and capabilities expand, pockets of analytical excellence develop in companies. Contrast that scenario to that of a high-performing organization with a culture that understands and celebrates the capabilities required to win with analytics. Due to the hard work required to build and maintain such an analytics culture, succeeding in this endeavor raises the stakes in the market. Accenture uses the term “organizational effectiveness” to structure the multifaceted endeavors required to foster an analytics culture. One facet of organizational effectiveness, for example, is promoting and reinforcing top leaders with analytical vision, passion, and the ability to nurture leaders at all levels. Another is developing and organizing talent with the right skill sets. The magic occurs when the interpersonal and process strengths of an innovative, results-focused culture are combined with the technical and data-mining skills required to deliver high performance. Fostering a High-Performing Analytics Culture Leadership, breaking down silos, and developing and keeping talent — are fundamental to fostering a high-performing analytics culture. 1) Leadership The single most important step you can take is to promote leaders with a passion for data analysis at every level. Leaders in the C-suite need to model appropriate behavior, but they do not own analytics in the organization. Every manager and leader in the middle ranks has to take responsibility for creating a more fact-based culture because through ownership comes commitment. It is also important for executives to take a hard, honest look at how in touch they are with the existing culture before they attempt to drive transformative change. In a recent Accenture survey, leaders in 400 organizations responded favorably to statements such as “This organization places a high value on collecting objective data to improve the quality of decision-making” and “In this organization, you get ahead based on merit and objectively demonstrated performance rather than political behavior.” In all but two of these 400 organizations, employees answered these questions in a very different way from their leaders. Having an accurate understanding of their organization’s readiness allows senior leadership to assess gaps and define a path forward to create an analytics culture. And this effort, in turn, helps them to get in sync with each other regarding how analytics will be used to support their strategic vision ― the value they want to gain. By translating that consensus down through the middle ranks, leaders can confer ownership of analytics to the appropriate people and thereby avoid what we call “the frozen middle.” Often an effective approach to achieving analytics goals is to recognize how factors play together. As Tom Anderson, CEO of Integrity Interactive, has said, “The beauty of analytics is that you find lots of things that can be incrementally improved. If it’s a multi-plicate business, [like] medical finance and you can improve each factor ― the number of doctors times the number of patients times the percentage that seek financing ― by 10 percent, it’s huge.” Harrah’s took a similar approach by recognizing the role of a number of service delivery factors for customer satisfaction. Tracking each of these factors, such as the time required to greet a customer or deliver a drink, allows them to be targeted separately if revenues slip. 2) Breaking down silos Silos naturally develop as organizations grow. Analytics in the service of the enterprise, however, requires cross functional collaboration ― what one UK-based healthcare company calls “boundary-less” collaboration. To address this tension, organizations need processes to facilitate people working together from all parts of the organization. The products of collaboration can then be applied in different parts of the organization. Procter & Gamble is an example of an analytics high performer that has established a central team to contribute to the bottom line in a variety of disciplines. This team, called Global Analytics, tackles challenges such as manufacturing site location, inventory management, supply chain design, and strategic decision making. Creating a single repeatable process for integrating analytics into everyday work is a powerful way to counteract the rigidity of “silo-think.” A closed loop decision making process such as that shown in Figure 1 defines how data is leveraged to test hypotheses and support decisions anywhere in the enterprise. Recent Accenture research shows that only one in five companies currently has such a repeatable process in place. Breaking down silos also facilitates the collaboration required to stay ahead of the competition. For example, as a strategic partner rather than an order taker, IT can help business units access the quality data needed to forecast more accurately, price more appropriately, and tailor offerings to customers or citizens more effectively. 3) Developing and keeping talent A smattering of quants around an organization is not an analytics culture. Up-skilling the workforce in analytic capabilities is quickly becoming essential just to keep pace with market. While training workers in IT skills has consumed the organization’s training departments in the past, the next 20 years will be about integrating analytics into everyday work. The bar is also rising for new hires. One financial services company, for example, requires all potential employees, including senior executives, to take a series of tests to determine analytical and financial aptitude. One successful hire joked that he might have been “the only HR guy who could pass their math test.” Analyzing the talent in the organization is as important as hiring talent with a passion for analytics. This application of analytics can provide a clear advantage to companies that use customer satisfaction as their differentiator. Harrah’s, for example, analyzes the effects of its health and wellness programs on employee engagement. In this way, the company showed that a rise in preventative care visits to its on-site clinics resulted in an annual decrease (by millions of dollars) in urgent-care costs. One reason Harrah’s chose to capture wellness metrics is because its leadership team understands that happy, healthy employees provide better customer service. Gathering this data provides insights on revenue growth as well as on health insurance and sick days. It is an example of the value of selecting the right metrics, however seemingly unrelated, to help make decisions that support the corporate strategy. Another use of talent analytics is to retain high-performing employees. Google has placed sufficient strategic importance on talent retention so that its people analytics function has a staff of 30 researchers, analysts, and consultants. As Laszlo Bock, Google’s vice president of people operations, says, “It’s not the company-provided lunch that keeps people here. Googlers tell us that there are three reasons they stay: the mission, the quality of the people, and the chance to build the skill sets of a better leader or entrepreneur. And all our analytics are built around these reasons.” This article was provided by Accenture.

Something is moving in Europe

Something is moving in Europe

By Mauro F. Guillen The eurozone is on the brink, but it seems that the ground leading to the precipice is less slippery than a week ago. The core source of concern is no longer Greece, although it continues to be a risk factor, but Spain and Italy. The diabolic feedback loop involving an economy in recession, a deterioration of bank solvency and an escalation of government debt is a continuous worry to investors. They fear that private debt can quickly become public debt, adding to the possibility of further sovereign defaults. And they are gravely concerned about the budgetary implications of the double-dip recession that has engulfed several of the peripheral economies and threatens to undermine the entire euro zone. The most urgent case right now is that of Spain. At the summit just concluded, European leaders reached two very consequential agreements. The first has to do with the direct recapitalization of troubled banks once a European supervisory authority is in place. This had been a key demand by the Spanish government, which did not wish the recent lifeline of 100 billion euro to compute toward its sovereign debt burden. The second agreement about seniority structure is also of significance given that bond investors were extremely jittery about the terms of the loan to Spain, which was senior to other lenders. While these European agreements will go a long way to calm the markets, the main problem remains _ the lack of economic growth. The main question mark is whether bank recapitalization will put an end to the credit crunch, which is preventing businesses from investing and households from purchasing durable goods. If credit fails to flow to the private sector and the state budget cannot be used to prop up demand due to its crushing debt burden, the beleaguered economies of the euro zone may not recover fast enough to reduce unemployment. In this context, the recent European agreement to spend 130 billion euro on new investment projects is a welcome announcement, although the size of the effort is relatively small. It does, however, signal a shift in the dominant thinking centered on the idea of budgetary austerity. At its next meeting, the European Central Bank has an opportunity to change its policy stand given the growing signs of recession around Europe. It can and should lower interest rates, and it can and should play a more vigorous role in the market for public debt. At the European summit, Italy won a key concession regarding the possibility of a bond purchasing program without the strict monitoring mechanisms imposed on Greece. It remains to be seen whether these agreements will be perceived by the markets as evidence of a shift in Europe’s approach to the crisis, one that helps investors overcome their fear that European institutions are not equipped to deal with the magnitude of the problem. The markets have been clamoring for decisive action. Now they seem to be getting bits and pieces of it, which is a good start. European efforts to create a fiscal union and a banking union are essential to overcoming the crisis in the medium to long run. They do not, however, address the immediate, short-term problems associated with the economic recession, especially unemployment. Distinguishing between what’s important and what’s urgent has never been more crucial. European leaders and the European Central Bank need to understand that the credibility of their long-term policies depends on their ability to address the short-run problems confronting the world’s largest market area. Mauro F. Guillen is Director of the Lauder Institute at the Wharton School.

Kakao Story tops Facebook

Kakao Story tops Facebook

By Cho Mu-hyun Kakao Story has topped Facebook to dominate the mobile social network service (SNS) market in Korea only three months after its launch. According to a survey of 13.95 million smartphone users using Google’s Android Operating System (OS) released Thursday by market research agency Nielsen KoreanClick, Kakao Talks’ SNS held 49.1 percent of user time over Facebooks’ 34.5 percent in May. The survey showed that Kakao Story held a meager 18 percent compared to its American counterpart’s 53.2 percent in March. Besides user time, the Korean mobile social network also had better numbers. A total of 9.44 million subscribers logged into Kakao Story at least once in May compared to 4.97 million for Facebook on their respective mobile applications, according to a KoreanClick official. “We secured over 10 million users within 8 days after we launched the service and have around 23 million now,” said a Kakao Talk spokeswoman. “The advantage of Kakao Story is that it is connected to our mobile messenger service.” Kakao Talk’s messenger service, which launched in 2010, has 53 million subscribers worldwide. Other data from Nielsen in May showed that 95 percent of domestic smartphone users are members of Kakao Talk. The company’s Kakao Story launched on March 20 allows users to post multiple pictures in their profiles and offers an SNS that is simpler than its Internet rival. It became the most searched word in Web portals Naver, Daum and Nate within three days. Most SNS that originate on PC platforms, such as Facebook, have trouble being converted to a mobile platform, said the spokeswoman. Unlike its competitors, Kakao Talk’s SNS service originated in mobile form so caught on faster, she added. “We believe that we have the caliber to compete in the global market with global SNS applications like Facebook. We will continue developments of Kakao Talk and Kakao Story to make it a service that gets accepted beyond Korea.” The company plans to expand to the Chinese market and provide a similar combined service in other countries. Kakao talk officials attribute the skyrocketing numbers to the diverse age group that uses the service, which according to one analyst, is more advantageous in sustaining user loyalty. KoreanClick’s data confirms the diagnosis: for Kakao Story, those in their teens, 20s, 30s, 40s, and 50s each accounted for 16.4, 25.5, 28.3, 21.5 and 8.4 percent, respectively. For Facebook, the same age groups held 15.6, 44.4, 15.7, 18.9 and below 1 percent. Kakao Talk also believes that those in their teens, who were drawn to the free chats (similar to short messages provided by mobile carriers) available in its services, automatically added the use to the new SNS. “We have data based on the birthday users put in when they register for Kakao Talk and Kakao Story, and teens make up a large portion of our subscribers.” Bae Eun-jun, an analyst at LG Economic Research Institute, stated in a report that due to the near free data available in smartphones, more people were using short messages or chat compared to expensive voice calls. Bae believes that eventually short messages will lead to communication through pictures, like those used in mobile SNS. Internet firms Facebook, NHN and Daum Communications are eyeing the smartphone market as consumers spend more time on the visual-intensive devices compared to bulky desktops.

Free childcare system

Free childcare system

Confusion mirrors policy disunity, poor preparation Despite attacks from deficit hawks and welfare minimalists, the ruling Saenuri Party has decided to push ahead with a free daycare system for all toddlers. And to help ease funding crises at local administrations, it will likely draw about 620 billion won from the government’s contingency funds. All these are moves heading in the right direction but they should have less to do with the governing party’s vote-gathering tactics for Dec. 19 presidential election than with the nation’s long-term growth strategy. Which in turn explains the need for politicians and bureaucrats to think over what has caused the ongoing confusion on free childcare services. It all goes back to 2007, when then presidential candidate Lee Myung-bak pledged to provide public daycare services for all children 5 years or younger free of charge. Like most other campaign pledges, it had been forgotten until another major election loomed. In the lead up to parliamentary polls this April, the Saenuri Party dusted it off, implementing it from March. The government and its party have wasted five long years without making proper preparations before introducing a system that can bring about significant changes to people’s lives. Part of the reason was disunity within the ruling camp. Bureaucrats, especially the budgetary authorities, were at odds with politicians’ welfare promises, criticizing them as election season populism. Such a lack of policy unity and the resultant impromptu implementation ― for instance by expanding beneficiaries of free daycare center use from the bottom 70 percent in the income bracket to everyone ― led to explosive demand and a far earlier depletion of budgets than expected at local autonomous bodies. So the problem is neither the lack of budget nor politicians’ populism but the disunity and inconsistency within the Lee administration. Had the officials made careful, sufficient preparations, they could have avoided concentrating benefits on only daycare center users and divided subsidies evenly to people who would rather take care of their children at home. Actually, industrial countries encourage homecare of toddlers less than 24 months old, as no one can replace their own parents at so young an age. Nor should the current confusion serve as an opportunity for welfare doomsayers to exaggerate what they claim is the danger of a universal welfare system, calling for a return to selective welfare. ``The government has to provide daycare for the grandchildren of chaebol families under the present system, and this is not befitting a fair society,” Vice Finance Minister Kim Dong-yeon said, adding it would be better for the ministry to spend more on poor people. Sounds plausible enough, but Kim does not seem to understand the true meaning of public welfare. Public welfare is not something in which the government takes money from the rich and gives it to poorer people. It is a sort of social insurance that everyone buys jointly to prepare for situations anyone can run into, such as education, childcare, unemployment and aging, at far cheaper prices. Without a proper welfare system, including free childcare, the nation’s economic growth itself will become unsustainable. Warnings against election-year populism are necessary but political conservatism should not be allowed to disguise itself as fiscal responsibility.

Senior citizens’ poverty woes

Senior citizens’ poverty woes

Senior citizens, who spearheaded the country’s economic miracle from the ashes of the 1950-53 Korean War, are now struggling with financial hardships in their later years. With the approaching retirement en masse of the country’s baby boomers ― those born between 1955 and 1963, the poverty problem of the elderly has the potential to mire the nation without proper precautions. A report released last week by the National Pension Research Institute shows that senior citizens here run the highest risk of falling into poverty after retirement, compared to those in other Organization for Economic Cooperation and Development (OECD) member countries. The institute is affiliated with the National Pension Service (NPS). According to the report, the income of elderly people stayed at 66.7 percent of the average household income in Korea last year, ranking second lowest in the economic club of rich countries. The ratio placed Korea at 29th among the 30 OECD members surveyed and the only nation with a lower figure than Korea was Ireland at 65.9 percent. Mexico was at the top of the list with 97.1 percent, followed by Austria (96.6 percent), Luxembourg (96 percent) and Poland (94.7 percent). Japan, one of the world’s fast-aging countries, posted a significantly higher rate than Korea at 86.6 percent. The lower income level of Korea’s senior citizens was attributed largely to the inadequate public pension system that usually acts as a social safety net for the elderly after retirement. Specifically, only 15.2 percent of their income came from the public pension scheme. In contrast, earned income through labor accounted for 58.4 percent of total earnings of an average person aged 65 or over. What’s worse is that only one third of the elderly receive the state pension and the average amount is as little as 280,000 won per month. The poverty rate measuring the ratio of households with income at less than 50 percent of the median income among the elderly reached 45.1 percent in the mid-2000s, the highest level in the OECD. The result is that senior citizens continue to work after the retirement age and often have to take jobs that are less rewarding. As it has been identified as an issue for many years now, it’s time for the government to come up with proactive measures to address the poverty problem of the elderly. To better prepare for the future of the nation, among other things, it is urgent to transform the labor market structure that is currently suited for a life expectancy of 60 to 70 to the centenarian age.

[Exclusive] PM, Defense Minister: Lying or neglecting?

[Exclusive] PM, Defense Minister: Lying or neglecting?

By Lee Tae-hoon “Everyone knows what the subjects of a Cabinet meeting are,” a top defense official said Friday. He made the remarks as he explained in private how and when he acquired the knowledge that the government was set to endorse a military intelligence pact with Japan during a closed-door Cabinet meeting on June 26. The deputy-minister level official alleged that he and other senior defense officials realized a few days before the meeting that the contentious bilateral deal would be approved on June 26. “I told other officials that it would be wrong (for the Cabinet to approve it without consulting the National Assembly),” he said. “But it was beyond my ability to pull it out of the list of subjects. I had already missed the boat.” The ranking official hinted that Defense Minister Kim Kwan-jin and Prime Minister Kim Hwang-sik should have known about the hasty move since he and his colleagues were also notified of a list of subjects to be approved at the meeting, including the intelligence pact. If his statements are correct, top military officials, including Defense Minister Kim and Prime Minister Kim have been either lying to the public, or neglecting their duty to pay attention to crucial national security matters. Prime Minister Kim claims that he had little time to review the General Security of Military Information Agreement (GSOMIA) before he approved it because somebody brought it up as an urgent agenda item to be deliberated at the Cabinet meeting. However, it is hard to believe that he had no clue of what would happen on June 26 when every senior defense official learned about it days in advance. Cheong Wa Dae concluded Friday that Kim Tae-hyo, a senior presidential secretary who stepped down over the fiasco, and the foreign ministry are the ones to be blamed for the masterminding of a plan to endorse the pact in a covert, corner-cutting manner. This, however, does not fully explain why Prime Minister Kim was so ill-informed of such a critical decision that “everyone in the inner circle knew” and whether he shares no responsibility for the bilateral deal’s secretive passage at the Cabinet meeting. Questions also remain about whether Defense Minister Kim and other security related officials conspired so that Prime Minister Kim would make a fool of himself by endorsing the GSOMIA without realizing the magnitude of its significance. In this regard, Defense Minister Kim refused to answer and his staff even filed complaints to the public relations office of the defense ministry over a reporter’s attempts to meet with the top military chief to check the facts of the matter. The vast majority of Koreans vented their anger when they heard the news on June 27, a day after Kim approved the GSOMIA, that the government had given the green light to the deal without notifying the Assembly and the media about it. It seems they were more upset because they harbored suspicions that the government was deceiving the public, rather than because of the content of the GSOMIA, which many experts claim would be mutually beneficial for Seoul and Tokyo for sharing intelligence on Pyongyang’s military moves. Their anger will not be alleviated unless those who have been lying or neglecting their duty admit to their mistakes and take responsible action over their mishandling of state affairs.