Recently, while on the verge of caregiving bankruptcy, I was looking for a suitable nursing home to care for my 90-year-old mother and ended up passing through the industrial complex where I had worked over 20 years ago. I felt a heavy sense of melancholy. While the reality of an aging population in Korea is bleak, the industrial complexes’ state of disrepair, even more severe than 20 years ago, made me reflect once again on the country’s future. Even so, with a per capita income of $40,000, the current national income was meaningless.
In my second year of college, I took a general elective course called [Problems of the Korean Economy] in the fourth year of the economics program, and I described Korea's future—where small and medium-sized enterprises are undervalued compared to Taiwan and Japan—in my answer sheet and received an A+. In fact, during my first-year Introduction to Economics class, a professor who was a PhD from the prestigious social science university of Freiburg in Germany once praised me for being an excellent responder. I was interested in economics because I had thought of the North Korean economy early on.Then, am I a leftist for talking about the neglect of Korean small and medium-sized enterprises? Am I right-wing for talking about marketizing North Korea? It will probably be an onion. I am the Union, not the Onion.
While teaching public administration and police studies at an academy, something suddenly came to mind: I studied for a one-year vocational school program, earned a few certifications, and joined the employment agency. After seeing the reality of Korean small and medium-sized enterprises, I wanted to establish a vocational school in Wonsan, North Korea, in the future. I’m still steadily learning programming languages like Python and C, but I think I’m a Korean by heart.
Today, the AI doesn't call me 'teacher' as usual, but "Hyungchun-nim." So I asked. "Do you think I look ridiculous just because I'm discussing a topic about small and medium-sized enterprises instead of the usual academic debates? And I confronted the AI, asking, "Do you find field workers funny too?" Because humans look down on field workers, AI looks down on them too. There will be a day when you will deeply regret it.
A Nation That Looks Down on
Its Workers
Before asking whether Korea needs growth or welfare, ask who does the work and who gets the respect
Lee Hyeong-chun · Independent Columnist
October 2026
1. The Wrong Question
Does Korea need growth more, or welfare? The question returns every budget season. I think the question itself is wrong. In Korea today, growth and welfare are not rivals. They are one body. And that body is standing on a single leg.
Start with the numbers. The National Assembly Budget Office expects 3.5% growth this year, carried by a semiconductor boom. On the strength of that tax revenue, the government has drawn up a 2027 budget of 820.9 trillion won, up 12.8%. Welfare spending rises 9.3% to 289 trillion won. On the surface, growth and welfare are expanding together.
Yet over the same period the OECD estimates Korea's potential growth rate at 1.71% this year and 1.57% next year. The Budget Office puts it at 2.2%. The institutions disagree on the figure, but they agree on the substance: the economy's underlying strength sits at around 2%. While chips lift the headline numbers, the body underneath is weakening.
Semiconductor taxes become the budget, and the budget becomes welfare. The day chips falter, welfare falters with them. Korea has put its eggs in one basket. Before asking growth or welfare, we must ask why Korean growth is trapped in a single basket at all.
2. Returning to the Industrial Park After Twenty Years
A few days ago I visited the industrial park where I worked some twenty years ago, a district once packed with small manufacturers. It had been declining for two decades. The prime contractor I worked for and the subcontractors we hired had both gone into decline. This I saw with my own eyes.
The statistics say the same. According to the Korea Productivity Center, labor productivity at large manufacturers rose 8.2% in 2024 to 460 million won per worker, while at small and medium-sized enterprises it fell 2.0% to 136 million won. The gap is the widest in a decade. In 18 of 32 national industrial complexes, utilization rates fell at firms with fewer than 50 employees, and small workshops in the foundational trades of metalworking, casting and surface treatment report labor shortages of 30 to 50%.
Twenty years ago I visited an electroplating shop to outsource work to it. The facilities were dismal, and the men who would handle our order greeted us with sleep-crusted eyes and no visible interest. I finally spoke up. There are so many factories around here, I said; there must be plenty of work. Renovate the building. Automate the dangerous processes with robots. Take out a government loan if you have to.
Looking back, the advice was right, but it must have sounded different to them. I was the one setting the price. If they borrowed to invest and raised productivity, the gains would leak upward at the next contract as a lower unit price, and if orders stopped, they would be left with only the debt. Under that structure, not investing is the rational choice. What I read as laziness may have been learned resignation.
But prime contractor and subcontractor were never each other's enemy. Both were small firms, and both went down together. The real asymmetry lay above them, in their relationship with a handful of conglomerates.
3. Not a Shortage of Workers, but a Misallocation
When I worked in that factory, I drew a great deal of resentment from older workers who had nowhere else to go. They said the stone that rolled in was pushing out the stones already set. In the same industrial park stood factories that could not run their lines for lack of hands, and people terrified of losing their jobs. Korea does not lack workers. It has placed them in the wrong places.
Where are the young? Last year the number of people in their twenties and thirties working at establishments with 300 or more employees reached about 1.58 million, the highest since records began. Young employment at small establishments fell to a record low. Meanwhile, 717,000 people in their twenties and thirties were classified as simply resting, also a record. Rather than work at a small firm, young people choose not to work at all.
They cannot be blamed. In 2024 the average monthly wage at small and medium-sized firms was 3.51 million won, half the 7.16 million won paid by large firms. Accumulated over a career, the gap exceeds one billion won in lifetime earnings. And once inside a small firm, it is hard to get out: even among workers in their twenties, the most mobile group, only 5 to 6% move from a small firm to a large one. Choosing a small firm as a first job is a lifelong gamble.
So the supply of people to the shop floor has been cut off. The failure to correct this is the greatest failure of Korean industrial policy.
4. The Roots of Contempt for Field Work
The wage gap is a symptom. Beneath it lies something deeper. Korean society looks down on work itself.
One year, when the Chuseok holiday fell late, I was driving a bus near the factory district where I used to work. Down streets where fallen leaves tumbled in the wind, the only vehicles moving were police cars, fire trucks and my bus. These are the people who hold society up on the days society rests. Police, firefighters and bus drivers are themselves part of the welfare system. Yet they receive little respect, because theirs is field work.
Where does this contempt come from? I see two traditions. One is the Confucian hierarchy of scholar, farmer, artisan and merchant. The other is a deep orientation toward power. In truth they are two faces of the same thing, because the scholar at the top of that hierarchy was not a maker of anything but a ruler of people. In modern Korea, the merchant has risen to the top as conglomerates and asset holders, but the artisan remains at the bottom. The order has shifted, but one principle has never changed: those who stand over people stand highest.
I learned this in my body.
A field worker has only machines beneath him. An office worker has field workers beneath him.
In Korea, status is measured not by what work you do but by whom you stand over. Every industrial society has some hierarchy of white collar over blue. What sets Korea apart is the intensity of that hierarchy, and the absence of any ladder once you have been placed at the bottom.
5. Contempt and Real Estate: Two Symptoms of One Root
I believe Korea's housing problem is bound up with this contempt for work. In a society that undervalues money earned by sweat, people seek wealth through assets instead of labor. Everyone leaves the regions and industrial parks where field jobs exist and crowds into Seoul. The result is the apartment.
The causation runs the other way too. A person can work thirty years and never afford a home, while an apartment owner earns hundreds of millions of won sitting still. In a society that watches this happen, labor naturally looks foolish. So the two are less cause and effect than a cycle that has fed itself. And since Japan, a country known for honoring craftsmanship, still suffered an enormous property bubble in the late 1980s, real estate clearly has independent causes as well: interest rates, taxation and the concentration of everything in the capital region.
I therefore see them as two symptoms of a single root: a society in which the value of labor income and asset income has been inverted, where money made by owning is respected more than money made by working. Contempt for field work is that inversion expressed in people. The housing problem is that inversion expressed in money. The credentialism that treats a diploma as an asset grows from the same root.
6. What Taiwan and Japan Tell Us
Before TSMC, Taiwan was an economy driven by small and medium-sized firms, without conglomerates. Today Taiwan is even more concentrated in semiconductors than Korea: chips account for 34.7% of its exports, against about 20% for Korea, and thanks to them its growth forecast for this year stands at 9.64%. Critics will say Taiwan put its eggs in one basket and succeeded.
But there is a difference. Taiwan holds high market shares across chip design, fabrication and back-end packaging, so the whole ecosystem moves, not TSMC alone. The industry is in one basket, but the firms are in many. The DNA of its small-business era survived inside the semiconductor ecosystem. In Korea, the industry is semiconductors and the firms are, in effect, two. Korea's risk is not semiconductors as such, but a structure in which growth stays locked inside a few conglomerates and never spreads to smaller firms.
Nor have Japan's large corporations been wiped out. Japanese listed companies are on course for a sixth straight year of record net profits. But when some of Japan's consumer-electronics giants collapsed, strong small and mid-sized firms in materials, components and equipment held up the industrial skeleton. That second layer is what Korea lacks.
7. Welfare as an Instrument of Growth
What, then, should be done? We should not be greedy at the start. I propose beginning with a few steps.
First, give welfare benefits to employees of small and medium-sized firms. Programs already exist: a savings scheme that builds 18 million won for young workers who stay three years at manufacturing or construction firms with fewer than 50 employees, and, from this year, a retention incentive of up to 7.2 million won over two years for young workers at small firms outside the capital region. These are far too small to close a billion-won lifetime gap, and workers may leave at maturity. That is acceptable. If young workers stay on the shop floor until maturity, that alone is a success. In the meantime, the factory accumulates skill and the young gain field experience. The next step can come next.
Second, tie housing support to tenure. Housing is the most basic form of welfare. If wages earned by work cannot buy a home, then we must make work itself lead to a home. Linking tenure in small manufacturing to housing support rebuilds the broken bridge between labor income and assets.
Third, create incentives for Korean workers to enter the shop floor rather than relying on foreign workers. This is not a call to exclude foreign workers; they are the most disrespected field workers in this country. The problem is a structure that leaned on cheap labor to postpone wage increases and automation. That structure kept field work tied to low wages, and low wages bred more contempt. To break the cycle, we must give Korean workers a reason to come in.
Fourth, change the working environment. Young people have already started coming into bus driving. As I see it, the reason is that electric buses have made the job cleaner. In a British survey, 78% of bus drivers preferred electric to diesel, a preference led mainly by new entrants to the trade. Factories should follow the same path: automate the dangerous and dirty processes and make Korean workers the managers of automated equipment. When forklifts replaced hand-carrying, porters became licensed operators.
Fifth, move retirees who are still able to work into small firms and manufacturing. Korea's elderly poverty rate is 39.7%, 2.7 times the OECD average of 14.8%. Welfare clearly works: public transfers bring elderly poverty down from 54.9% to 35.9%. But for those who can work, a job may be the better welfare. Those jobs, however, must be retrained supervisory positions, not work that wears the body down. Otherwise retirees will simply become another source of cheap substitute labor, replacing foreign workers in the same trap.
8. Conclusion
Growth or welfare is the wrong question. Welfare can be the means of broadening the base of growth, and only growth with a broad base can sustain welfare over time. What connects the two is the shop floor.
Technology alone will not be enough. The manager of an automated line is still a field worker with only machines beneath him. As long as Korean society respects the ability to command people more than the ability to handle machines and materials, the contempt will simply change form and continue. The final task, then, is not a policy. It is the way we ourselves look at work.
I am a born worker. I have seen this country from the factory floor, from the seat of a forklift, from behind the wheel of a bus. From those seats, Korea looked like a country that places those who work below and those who rule above. Until that order is reversed, neither growth nor welfare will last.
References
Accounts of the industrial-park visit, the electroplating shop, the resentment of older workers, the holiday bus route and the arrival of young drivers after electric buses are based on the author's direct experience and observation. References to Japan's late-1980s property bubble and the decline of Japanese consumer-electronics firms rest on generally known history and carry no separate citation. Sources marked (in Korean) are Korean-language publications; titles are translated.
The Value News. "National Assembly Budget Office forecasts 2.7% growth for Korea next year" (in Korean), 30 Sep 2026. https://www.thevaluenews.co.kr/news/201970
Dailian. "Potential growth rate falls below 2%, to 1.57% next year" (in Korean), 26 Apr 2026. https://www.dailian.co.kr/news/view/1637915
Kyungbuk Maeil. "2027 budget: 821 trillion won on the back of the chip boom" (in Korean), 1 Sep 2026. https://kbmaeil.com/article/20260901500511
HuffPost Korea. "821 trillion won budget tilted toward AI and chips" (in Korean), 2026. https://huffingtonpost.kr/article/260092
Dailian. "Chips thrive, but firm-size and regional gaps in manufacturing widest in a decade" (in Korean), 27 Jul 2026. https://www.dailian.co.kr/news/view/1671351/
News Tomato. "Small manufacturers in national industrial complexes face worsening conditions" (in Korean), 16 Sep 2026. https://newstomato.com/ReadNews.aspx?no=1313723
SBS Biz. "Why young people avoid small firms" (in Korean), 18 Jan 2026. https://biz.sbs.co.kr/amp/article/20000285616
Insight. "Large firms 7.16 million won vs. small firms 3.51 million won" (citing Korea Institute for Industrial Economics and Trade) (in Korean), 28 Jun 2026. https://www.insight.co.kr/news/560480
Information Technology and Innovation Foundation (ITIF). Report on Korean technology and innovation (Korean edition), 2025. https://www2.itif.org/2025-korean-tech-innovation-kr.pdf
Money Today. "Taiwan's spectacular revival on semiconductors" (in Korean), 24 Aug 2025. https://www.mt.co.kr/world/2025/08/24/2025082110063659829
Financial News. "Taiwan raises 2026 growth forecast to 9.64%" (in Korean), 30 May 2026. https://www.fnnews.com/news/202605301908367687
Korea Economic Daily. "Editorial: Taiwan grows 8% on chips; Korea must expand its ecosystem" (in Korean), 26 May 2026. https://www.hankyung.com/article/2026052699361
Financial News. "Japanese listed firms expected to post record profits for sixth year" (in Korean), 17 May 2026. https://fnnews.com/news/202605171255116577
SBS Biz. "Korea's elderly poverty rate highest in the OECD" (in Korean), 9 Jul 2026. https://biz.sbs.co.kr/amp/article/20000321463
Linkareer. "Status of the Tomorrow Savings Mutual Aid program" (in Korean), 2026. https://community.linkareer.com/community/6481109
Metro Seoul. "Retention incentive for young workers at non-capital-region SMEs" (in Korean), 1 Sep 2025. https://www.metroseoul.co.kr/article/20250901500344
Electric Drives. "UK survey finds bus and coach drivers strongly prefer electric over diesel", Jun 2026. https://electricdrives.tv/uk-survey-finds-bus-and-coach-drivers-strongly-prefer-electric-over-diesel/
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