Chaebol’s Turn to Service: The Rise of a Service Economy and Shifting Dynamics of Self-Employment and Wage Work Korea after 1997

• In Event: 158. South Korea, Twenty Years after the Financial Crisis of 1997

Abstract

East Asian economies have undergone increasing tertiarization in recent decades. This paper contributes to the debate on rising service economies and precarious work regimes through examining the patterns of service sector growth and resulting employment transitions in Korea’s distribution sector. We build upon theories of East Asian business groups and literature on comparative capitalism to examine the aftermath of the Korean government’s liberalization of retail and distribution sectors (1981-1996). Conducting a historical analysis of service sector development and decomposing the Korean Economically Active Population survey for the years of 1987-2011, we chart the process of service modernization in retail and distribution. Systematization of the retail and distribution sectors had been led by the country’s large business groups as a number of chaebol subsidiaries quickly diversified into the distributive sectors during the 1990s, particularly after the 1997 financial crisis. We argue that these developments led to the consolidation of the domestic consumer economy, which in return exerted enormous pressure on and led to the rising displacement of, the country’s self-employed, who used to run a bulk of Korea’s retail and distribution businesses. In the self-employed place, the service sector had undergone gradual formalization where the newly generated jobs are increasingly precarious and in non-regular forms.

Authors

• Lanu Kim, University of Washington

• Solee I. Shin, National University of Singapore