Korean Job Discussion Forums

[trubadour]

Thanks for some decent and contructive comments reflecting the very real and frustrating experience of working under our current economic conditions. I appreciate reading the views and reflections of the experienced and concerned teachers on this board. I appreciate in particular Real Reality for bringing our attention to the issue. Real Reality's only error, in my view, is that he seems to think this is an isolated problem confined to expat English teachers in Korea.

Unfortunatly, this is not the case. Furthermore, this focus scews the possibility of seeing the truth of the economics involved. Our working and social conditions are not quite typical and these factors can seem to undermine comparisons with other sectors (for better or for worse). Thus, we can become interwinded in discusion of the details.

However, our concern for the economic realities of life today are not at all without foundation. It is a fact, a bewildering fact, that wages aren't going up in any significant way and this isn't limmited to teachers. It is the same for all employees in all sectors. In real terms wages are going down.

Factoring in inflation, the average 30 year old makes LESS today than they did 30 years ago. Wages are going down. Yet, productivity is going up, and businesses are growing. There are more English teachers teaching more students, for example.

Indeed, this should be a great time for Hagwon owners and for those of us who teach English in Korea. The demand for our services keeps going up. Hagwons are able to charge a million a month for each child they teach, just to cover the demand. In that context our 2-3 million in wages and accomodation is tiny, if not insignificant.

But here's the rub: despite appearances, we are not being ripped off by our directors. It is not the fact that newly 'qualified' labour arrives to fill ever increasing vacancies, although in our line of work, in Korea, this is a factor. Wages remain stagnant for another reason.

At hagwons, for example, the better our teaching the more students that roll in, the more money we make for our school doesn't increase the money available to our bosses to pay wages.

All that happens is that rent goes up. That is the landlord takes a bigger and bigger cut of out hard-earned wages. The more we produce, the more the LANDLORD makes. The better organised the business, the more money the LANDLORD makes.

It can be described in a simple formula:

wages = interest - rent

(interest - rent = wages)

Interest is here taken in its pure meaning: the money made from the activities of any given business. I've excluded other expenses to make it simpler.

Extra productivity simply goes to rent.

This is the same for all businesses accross the globe. Only the landowners are getting richer. Everyone else is working harder for less.


Am prepared to be ignored! Slagging matches make better TV, afterall.

edited to include the definition of interest.

[KoreanAmbition]

Trubadour,

Good post.

[Unposter]

Trubador,

Very interesting.

[Kimchieluver]

[Kimchieluver]

Furthermore, there is the risk factor. The hogwan owners have a lot to lose if their business fails. Sometimes, they have put almost everything they have into a hogwan. A teacher meanwhile has a few million or so if the place goes caput.

[Typhoon]

Another interesting fact about the hagwon industry is that a lot of Korean hagwon teachers (not the Korean kindy hagwons), do not get paid a salary. They are paid based on the enrollment in their classes. This way they are rewarded for bringing students into the hagwon.

[Thunndarr]

[TheUrbanMyth]

[Real Reality]

[crescent]

[trubadour]

Interesting point, crescent: the salary of public school teachers does not immediately fit on the equation quoted above. Presumably this is because schools are except from paying rent to anyone, or its rent is subsidised by the local authority, as you say.

However, this exemption or subsidy may account for the relatively high ratio Real Reality cites above, where schoolteachers have apparently more than twice the average wage. This is why I said teachers in Korea don't really represent the whole deal. However, do you think that the exception, in this case, proves the rule? Lower rent = higher wages.

Concerning hagwons, I would be quite surprised to learn that the majority own their own land, as they usually seem to be just one business among others, occupying a section of a building.

I aggree that even if they did own their buildings they would simply be able to make more profit, with little incentive to pass this on to their employees, though it may be so in some cases. To pay leases or mortgages on the place of business is the most common arrangement for most businesses. This is because usually, the bosses have a certain skill (for example, in English) around which they have created a business, for which they have needed to acquire land in a good location.

You may be correct when you say that many may be able to secure leases on their premises. However, the landlord is still able to charge whatever he can get for it for as long as he likes. It is no different to rent. It may be that the landlord may not be in a strong position (with less valuable land) and so may be willing to make a deal to insure a certain income for as long as possible. If a business is successful, when the lease is up the landlord can simply raise the price of rent or rent it to someone else who will pay more.

Furthermore, contrary to your supposition, this is done with little or negligible risk taken on the landlords part.

It is clear, when we look at the current situation, that landlords stand to benefit from the labour, risk and enterprise of other people. Their only risk comes from deciding what is the most profitable business to operate on his land. Though this might be a difficult decision, he really cannot loose. Unless the land really is worthless or the businesses hopeless the landlord will usually make money from something at some time.

In fact, he will make money even if the other people surrounding his land improve theirs, or even if the government builds a new road or makes some other improvement in the neighbourhood. The land will increase in value, even if other businesses are successful, if a city grows around it, or even if the countryside becomes sought-after, he just has to wait and do nothing. This is called land speculation.

In purely economic terms (leaving aside the morality of it) this kind of market creates a win-win situation for land owners and a loose-loose situation for those without.

If we think about it, we can see that a business owner or entrepanour without land faces considerable and increasingly steep disincentives for him to succeed at his business.

The more successful a business is, the more money it makes, the higher the value of land. Yet, it is a value business owners and customers - that is, the community - created through our work, in our natural drive to improve our existence for ourselves. It is necessary and natural as far as the workings of a human society are concerned. And it is a financial gold mine for the landowner, who profits from the work of society, but who contributes nothing.

Rent is not the only expense, of course. One of the reasons we are here in Korea (and which my account somewhat for our higher wages on the survey) is the lower rate of taxes. Income tax, often held as the solution to inequality, merely increase the burden on the industrious. Income taxes, council taxes, all increase the more money made. Thus, the more students we educate, the better we educate them, the more people employed, the more money we loose to taxes.

To make matters even worse, any money I do manage to keep and spend or save or invest is also taxed, through VAT, for example. This way we lose even more when we seek to gain advantage from the wealth we have worked so hard to create. Such taxes create further disincentives for us to exchange the wealth we have helped produce, exchange which would also increase wealth

This is then a systemic compulsion to economic stagnation, which is endemic worldwide. It explains why technological and improvements in efficiency, capacity, etc, of businesses do not increase wages This means that they do not benefit the community as much as they should because they serve mainly to make a few people richer and to increase taxes for all.

Hence the increasing disparity between rich and poor, in Korea as elsewhere. This is a proven trend which merely worsens as people become more educated, experienced and skilled, as industry becomes more efficient, as government more benevolent, as technology improves, even as people spend more.

This situation is so common and widespread that it has been accepted as natural, normal and even just. People say that life is unfair, that the economy is 'irrational.' But is it?



edited to correct spelling errors and revise bold fonts.

[Thunndarr]

[TheUrbanMyth]

[lucas_p]

Boy, sounds like I need to move to Canada. Where I am from, the average starting teacher's salary in K-12 is $21,000 a year. Take away taxes and the horrible attitude of students and the working conditions, and it is no wonder why my current HS has such a hard time finding teachers that the English teacher is also teaching math, as well.

After that, of course, it goes up by LEAPS and BOUNDS .

My Spanish teacher who had taught in my HS for a couple of decades was making the huge sum of $40,000.


On another note -- everyone has their own reasons for being here. But even being a qualified teacher back in the States means nothing. It is actually STILL worth more here to work than back home doing qualified teaching. So I don't blame anyone for coming here, really.

[Thunndarr]