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Evaluation of Success or Failure Factors

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Evaluation of Success or Failure Factors06



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Title Evaluation of Success or Failure Factors
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Material Type Report
Date 2015
Language Korean
File Type Theme
Subject Industry and Technology < Energy
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Abstract

Sub-Theme 4 | Evaluation of Success or Failure Factors



 



(1) Rationalization of the Coal Industry



The goals of the rationalization policy were closing inefficient coal mines and building up efficient coal mines. It can be said that the rationalization succeeded in the first goal but failed in the second goal. The rapid contraction of coal production seemed unavoidable because the demand for coal decreased at more than the pace expected by the government. However, it should be equally noticed that the rationalization plan was lacking in policies for securing coal demand, such as the construction of a electrical power plant using anthracite and long-term purchasing contracts with consumers.





(2) The Role of the Government



The Korean government played a dominant role in the rationalization of the coal industry. The intervention of government in the adjustment process of the coal industry was observed generally in other countries, because it is not easy to exit from the coal industry where exit barriers are very high. The rationalization of the coal industry in Korea was also initiated by the government in a similar way to Japan’s.



The rationalization of the coal industry was the issue that comprised not only ‘scrap-down and build- up’, but also the dismissed workers and the decline of the coal-mining regions. However, there was no headquarters to coordinate various businesses accompanying the rationalization. This absence of a headquarters brought about inefficiency in the execution of the rationalization. Such heavy dependence on subsidy means that the rationalization had no longer aimed to foster the self-reliance of the coal industry. The stereotyped idea that coal was home-heating fuel for low-income households made the government stick to the low coal-price policy, without securing new coal demand.





(3) Socio-economic Effects



The rationalization of the coal industry exerted broad effects upon the Korean national economy. Among them, it greatly influenced government finance and the energy consumption structure. The rationalization of the coal industry not only lightened the government financial burden but also influenced the structure of energy consumption.

The rationalization of the coal industry was accompanied by severe social problems, one of which was the mass unemployment of mine workers. In contrast to the compensation for unemployment, there was only negligible support for the re-employment of the dismissed workers. The weak labor unions in Korea may explain their passive adaptive strategy.



 



[Employment Situation of the Dismissed Workers]







The final plan for the rationalization of the coal industry did not entail a concrete plan for the revitalization of the coal-mining regions. It is an outstanding characteristic of Korea that the residents’ movement played a decisive role in the establishment of the revitalization policy in comparison with Japan. But the residents were lacking in competence to manage or supervise the businesses of the revitalization.