TWO ENORMOUS gray buildings adorned with blue, pink and yellow rectangles meant to resemble a portray by Piet Mondrian dominate an industrial park south of Seoul. Inside, the world’s largest manufacturing traces for semiconductors churn out chips for Samsung Electronics 24 hours a day. Robots zip alongside rails on the ceiling, carting stacks of silicon wafers from one step within the course of to the subsequent. Few people are allowed anyplace close to the equipment, and solely in protecting fits, to forestall stray hairs or specks of mud from contaminating their output.
These buildings and others like them have been on the coronary heart of the South Korean economic system’s resilience all through the pandemic. It shrank by simply 1% in 2020, as world output fell by 3.5% and plenty of wealthy international locations suffered a lot deeper recessions. It’s projected to develop by about 3.5% this yr—its greatest tempo in a decade. It has already regained its pre-pandemic measurement. That may be a perform primarily of exports, that are dominated by semiconductors and different manufactured items, and had been up by 16.6% year-on-year in March. Samsung made more cash in 2020 than the yr earlier than, regardless of the pandemic.
Mixed with South Korea’s success in limiting infections, this has meant that components of the economic system have hardly observed the pandemic. Employment in manufacturing in South Korea stayed roughly fixed between January 2020 and March of this yr. Frantic development of gleaming buying malls and condo blocks across the industrial park in Pyeongtaek is testomony to the world’s dynamism. At lunchtime automobiles are double-parked outdoors the rows of recent eating places.
A barista in a espresso store studies enterprise as common, apart from a couple of weeks within the winter when she was allowed to serve solely take-away. Two younger males at an outdoor desk who work for semiconductor companies say the pandemic has made little distinction to their lives over the previous yr. “It’s manufacturing unit work, not one thing you are able to do from residence, so we’ve been going to work and taking our breaks right here the entire time,” says one.
Close to Ewha College in north-western Seoul, nonetheless, the image is strikingly completely different. The grid of small streets which used to bustle with native and worldwide college students and Chinese language vacationers is usually abandoned. As college seminars have moved to Zoom and quarantine guidelines have saved foreigners away, the majority of the world’s cafés, eating places and cosmetics outlets have closed down. The few that stay open are struggling. “I’ve been right here for 30 years and that is the worst it’s ever been,” says the proprietor of a store promoting cut-price garments. She expects that she will grasp on for a couple of extra months, however she has needed to fireplace her part-time gross sales assistant. A restaurant across the nook stayed in enterprise by making deliveries however has needed to lay off most of its employees.
Unemployment, which hit a 22-year excessive of 5.4% in January, was again to pre-pandemic ranges by March. However the variety of folks employed in retail, meals or leisure was nonetheless 6.6% under the extent of 2020, suggesting that many had dropped out of the labour pressure altogether somewhat than registering as unemployed. Whereas export-focused companies are benefiting from the restoration in world demand, these industries will endure for longer, says Park Seok-gil of J.P. Morgan, an funding financial institution. The sluggish tempo of vaccinations, he argues, will act as a drag on providers in the course of the yr.
Some economists fear that the extended droop could exacerbate the already gaping divide between high-tech manufacturing and low-productivity providers. “If the disaster is extended, it would depart scars on fragile sectors and poorer, much less well-educated employees,” says Park Chang-hyun, an economist on the Financial institution of Korea, the central financial institution. Some small service companies could not rehire everybody they’ve laid off, so a few of those that misplaced their jobs within the pandemic could discover solely badly paid, precarious part-time jobs. In the event that they discover no work in any respect, the pandemic-related shrinkage of the labour pressure could develop into everlasting, reckons Mr Park. Youth unemployment is a specific concern: it has continued to develop at the same time as total employment has begun to get well, reaching 10% in March.
To cushion the blow, the federal government has doled out about 1% of GDP in aid funds to small companies since September. It has additionally introduced huge investments in digital infrastructure and “inexperienced” applied sciences with the purpose of making extra well-paid jobs. However that may take some time. Enterprise-owners say that the funds have barely made a dent of their losses. They need the federal government to compensate them for misplaced earnings and to broaden low-interest loans to tide them over the rest of the pandemic. In the meantime, South Korea continues to file a whole lot of instances of covid-19 daily. The roll-out of vaccinations is progressing sluggishly, and restrictions on socialising and eating out stay in place. It will likely be some time earlier than the standard bustle returns to the streets round Ewha. ■
This text appeared within the Asia part of the print version beneath the headline “Chips and blocks”