Public Opinion Briefing Vol. 68-2: 2010 Outlook: High Expectations for the National Economy, but Uncertainties in Specific Sectors

Public Opinion Briefing Vol. 68: Regular Public Opinion Barometer Survey

1. Perceived Economy Hits Bottom Compared to Previous Year, Income Disparities Narrow

2. 2010 Outlook: High Expectations for the National Economy, but Uncertainties in Specific Sectors

2009 was a year where overcoming the economic crisis was the paramount concern for our society. It was a year where households, businesses, and the government alike had to endure considerable hardship. As a result, not only objective macroeconomic indicators but also the public's assessment of the national and household economic situation show a significant decrease in pessimism, suggesting that the perceived economy has hit bottom. Reflecting this situation, expectations for the Korean economy in 2010 were relatively high, anticipating improvement compared to the current year. However, optimistic projections for the household economy remain low, indicating a lack of confidence in whether the favorable macroeconomic trends will translate into tangible improvements in household finances. This contrasts with the expectations for the Korean economy.

Specifically, when asked about public expectations for 2010 across specific tasks in the political, economic, social, foreign policy/security, and livelihood sectors, the public's outlook remains dim. While 'economic growth and job creation' and 'strengthening the ROK-US alliance' received relatively optimistic projections, pessimism was highest regarding issues directly impacting quality of life, such as the 'wealth gap' and 'private education expenses.' Projections for social integration tasks like 'labor-management relations' and 'national unity,' political and social tasks such as 'maturation of democracy,' and 'inter-Korean relations' were not bright.

In conclusion, while expectations for the overall recovery of the Korean economy have grown in 2010, public anxieties regarding specific sectors remain unresolved. Just as the hardships and efforts of societal members in 2009 helped escape the worst perceived economic conditions, we hope that the recovery of the Korean economy in 2010 will revive hope and optimism across all sectors of society.

Perceived Economy Improved in 2009, but 2010 Economic Outlook Remains Cautious

High Expectations for Korean Economic Recovery, but Cautious Outlook for Household Economy

In 2010, 40.5% expect the Korean economy to improve, while only 27.3% expect household economy to improve.

Regarding the economic outlook one year from now, expectations for the national economy are relatively high, whereas cautious projections dominate for the household economy. For the 'Korean economy situation in one year,' 40.5% responded 'will improve' (4.0% 'will greatly improve,' 36.5% 'will generally improve'), and 44.1% responded 'will be about the same.' Only 12.0% (2.2% 'will greatly worsen,' 9.8% 'will generally worsen') predicted a worsening, indicating a relatively high proportion of optimistic projections.

However, for the household economy, only 27.3% (3.2% 'will greatly improve,' 24.1% 'will generally improve') responded that it 'will improve,' while the most common response was a cautious 'will be about the same' at 55.7%. Nevertheless, only 14.6% predicted a worsening, indicating a relatively low proportion of pessimistic projections. Despite positive economic indicators, the cautious assessment of the household economy likely stems from the continued uncertainty in domestic and international economic conditions, and the acknowledgment, as mentioned by the President, that it takes time for improvements in macroeconomic indicators to translate into personal and household economic gains.

[Figure 2] 2010 Economic Outlook

Note: 'Don't know/No response' for the Korean economy outlook question (3.5%) and for the household economy outlook question (2.4%) are not shown.

2010 Outlook for 8 Specific National Task Areas Shows Sectoral Differences

Wealth Gap & Private Education Expenses: Major Concerns, "Worsening Expected"

Labor Relations, Democracy, National Unity, Inter-Korean Relations Outlook: "At Best, Maintain Status Quo"

ROK-US Relations, Economic Growth/Job Creation Outlook: "Slight Improvement Expected"

EAI, in collaboration with JoongAng Sunday and Korea Research, conducted a comprehensive assessment of the Korean and household economies, as well as an examination of public expectations for 2010 across eight key national task indicators encompassing political, economic, social, foreign policy/security, and livelihood sectors. The eight national task indicators selected were: 'economic growth and job creation' and 'resolution of the wealth gap' in the economic domain; 'realization of democracy' in the political domain; 'ROK-US relations' and 'improvement of inter-Korean relations' in the foreign policy/security domain; 'labor-management relations' and 'national unity' in the social domain; and 'reduction of private education expenses' in the livelihood domain.

For ease of comparison, responses for 'will worsen,' 'will be about the same,' and 'will improve' were converted to scores of 0, 50, and 100, respectively, and averaged. The results show that expectations for ROK-US relations in 2010 scored 68.4 points, the highest optimistic outlook, although still far from a perfect score. Next, expectations for inter-Korean relations scored 55.3 points, indicating a slight improvement expected beyond the status quo (50 points). However, areas such as inter-Korean relations (50.5 points) and Korean democracy (45.5 points), as well as urgent national tasks for resolving social conflicts like national unity (44.5 points) and labor-management relations (41.9 points), scored at or below the 50-point mark, suggesting expectations of at best maintaining the status quo. Pessimistic projections were overwhelmingly dominant for the tasks of reducing private education expenses and resolving the wealth gap. The expected score for reducing private education expenses was only 34.0 points, and for the wealth gap issue, it was 27.7 points, indicating strong pessimistic expectations falling short of maintaining the status quo.

Ultimately, public expectations are relatively positive regarding 'economic revitalization' and 'strengthening the ROK-US alliance,' which have been emphasized by President Lee Myung-bak and the ruling party since the beginning of their term. Conversely, the public also harbors concerns about 'widening polarization and social conflict' and 'weakening democracy,' which are frequent criticisms of the government. As the Lee Myung-bak administration enters its third year, it faces the challenge of stabilizing ROK-US relations and meeting public expectations for economic growth and job creation, while simultaneously addressing the pessimistic or uncertain outlooks regarding the wealth gap, private education expenses, social conflict, and inter-Korean relations. Recently, the government has designated job creation as its top national priority for 2010, established the Social Integration Committee, and is actively pursuing policy measures to address the issue of private education expenses. Attention is focused on how these efforts will be evaluated one year from now.

[Figure 3] Average Expected Scores for 8 Sectors in 2010

0 points (will worsen) ~ 50 points (maintain status quo) ~ 100 points (will improve)

Note: Responses for 'will worsen' were converted to 0 points, 'will be about the same' to 50 points, and 'will improve' to 100 points, and the average was calculated. 'Don't know/No response' was excluded from the calculation. An average score closer to 0 indicates a strongly pessimistic outlook that it will worsen, a score closer to 50 indicates maintaining the status quo, and a score exceeding 50 and closer to 100 indicates a strong optimistic outlook that it will improve.

Analysis of Response Distribution for 2010 Sectoral Outlooks

[Figure 4] 2010 Outlook by 8 Sectors (%)

ROK-US Relations: "Maintain Status Quo" 50.1%, "Improve" 39.3%, "Worsen" 4.7% - Similar to February Levels

For ROK-US relations, the proportion of respondents who thought it would be 'about the same' was the highest at 50.1%, and the proportion who believed it would 'improve' was also relatively high at 39.3%. Only 4.7% responded that it would 'worsen.' This is interpreted as a result of the public feeling a sense of stability in ROK-US relations, stemming from the close cooperation shown by both leaders in numerous summit meetings on bilateral and international issues. Indeed, the US supported South Korea's accession to the G20, its chairmanship, and the hosting of the G20 Summit, and deferred the overseas deployment of US Forces Korea. In return, South Korea decided to deploy troops to Afghanistan and maintained active support for US global leadership. This situation remained similar to the survey conducted in February, at the start of the second year of the administration.

Growth and Job Outlook Slightly Improved: "Maintain Status Quo" 53.6%, "Improve" 27.2%, "Worsen" 16.8%

Pessimistic Outlook Halved Compared to February: "33.6% (February) -> 16.8% (December)"

Regarding economic growth and job creation, the majority of respondents (53.6%) believed it would be 'about the same,' while 27.2% expected improvement and 16.8% predicted worsening. Overall, expectations are for at least maintaining the status quo or better. Notably, the pessimistic outlook on economic growth and job creation has significantly decreased compared to the February survey. In the February survey, 24.8% expected improvement, 39.6% expected it to be about the same, and 33.6% held a pessimistic view. While the proportion expecting improvement remained unchanged (24.8% -> 27.2%), the percentage predicting worsening significantly decreased (33.6% -> 16.8%), and the proportion expecting it to remain similar increased substantially (39.6% -> 53.6%).

Inter-Korean Relations: "Maintain Status Quo" 58.2%, "Improve" 17.8%, "Worsen" 16.8%

Despite Worst-Case Scenarios in 2009 (North Korean Nuclear Test, Missile Launch, West Sea Clash), Pessimism Decreased and Optimism Increased

For inter-Korean relations in 2010, 17.8% expected improvement, while only 16.8% predicted worsening, with an overwhelming 58.2% anticipating no significant change. The proportion expecting improvement (17.8%) represents a 9.5 percentage point increase compared to the February survey results (8.3%). Conversely, pessimistic projections decreased significantly by 32.1 percentage points from 48.9% in the February survey, while expectations of maintaining the status quo increased by 20.2 percentage points from 38.0% in the February survey. The reduction in pessimistic sentiment and the increase in expectations for maintaining the status quo or improving relations can be partly attributed to the favorable atmosphere created by the resumption of inter-governmental exchanges, such as the government's provision of Tamiflu and private aid to North Korea. However, it can also be argued that the dire situations in 2009, including North Korea's long-range missile test in April, second nuclear test in June, and the third West Sea clash in November, have led to a cynical assessment that inter-Korean relations cannot possibly worsen further, thus contributing to the decrease in pessimistic projections.

Democracy: "Maintain Status Quo" 45.4%, "Worsen" 27.6%, "Improve" 19.4% - Similar to February Levels

Regarding the level of democracy in our society, only 19.4% expected improvement next year. Projections for worsening and remaining the same were 27.6% and 45.4%, respectively. With negative projections outweighing positive ones, efforts from the government and political circles for improvement in the coming year are deemed necessary. Given the criticism of autocratic governance experienced in 2009, and the persistent conflicts over issues such as the media laws, the Sejong City project, the Four Major Rivers restoration project, and the 2010 budget, it is crucial for the government and political circles to make genuine efforts to prevent cynicism and indifference from taking root due to their uncompromising confrontations.

Labor Relations: "Maintain Status Quo" 43.5%, "Worsen" 32.5%, "Improve" 17.4%

National Unity: "Maintain Status Quo" 49.0%, "Worsen" 27.2%, "Improve" 17.0%

For the upcoming year's labor relations, 17.4% expected improvement. Projections for worsening were 32.5%, and a significant 43.5% anticipated the situation to remain similar. While some changes are being observed within the labor sector, such as some unions leaving the Korean Confederation of Trade Unions (KCTU) or news of no-dispute wage negotiations at some companies like Hyundai Motor Company, the reflection of the current situation, marked by the Ssangyong Motor incident, the public officials' union controversy, and the recent tug-of-war between political parties and labor-management over labor law revisions, suggests that significant improvement is not anticipated.

Consistent with the lukewarm outlook on labor relations, expectations for improvement in national unity were also low at 17.0%. A lukewarm outlook of 'about the same' was prevalent at 48.0%, with 27.2% predicting worsening. Despite the government's establishment of the Social Integration Committee and active engagement in tripartite negotiations, it appears imperative to achieve tangible agreements and actions that the public can experience to reverse the lukewarm public response towards labor relations and social conflict.

Private Education Expenses: "Worsen" 42.0%, "Maintain Status Quo" 37.4%, "Improve" 17.5%

Wealth Gap: "Worsen" 51.9%, "Maintain Status Quo" 36.7%, "Improve" 8.6%

When asked about the outlook for reducing private education expenses in 2010, the largest proportion (42.0%) predicted worsening, followed by 37.4% expecting the situation to remain the same, and only 17.5% anticipating improvement. Despite the government's recent proactive measures, such as improving foreign language high school admissions and prohibiting night-time cram school operations, it appears challenging to reverse the public's pessimistic outlook. However, regarding the wealth gap, the proportion predicting worsening decreased by 11.8 percentage points from 63.7% in the February survey, and the proportion expecting the situation to remain the same slightly increased from 28.8%. This indicates a slight improvement in public perception. Nevertheless, it is crucial not to overlook the deeply rooted concerns the public holds regarding the wealth gap.